The law requires certain things. If your protocol doesn't account for those things, then your protocol will be broken to bend to the law's will. It would often be much better to have some small compromise in privacy, rather than lose it all. "All or nothing" has some extreme outcomes.
Yes, some people do want privacy at all costs. But what about the rest of us? We send postal mail in envelopes and leave them sitting in boxes open to the street. Our phone calls traverse networks unencrypted and are overhead nearby. Our credit cards and secret PINs can be input at public facilities that enable stealing. Our laptops sit at home or work and can be broken into and memory dumped for encryption keys. In practice, 99% of us are completely fine with an acceptable risk of a possible loss of privacy. We help bolster this with laws and punishments should someone violate our privacy. But what we don't do is engineer our lives as if we're all spies hiding from an execution.
There are practical changes that could be made to allow for better functionality, whilst not having absolute privacy at every conceivable technical level, but still more than enough privacy that what we care about most is still reasonably private. Then there might be enough mild privacy lost to enable organizations the functionality they need, and we would lose less to the "all or nothing" consequences.
The thing is, there is an extremely small number of people who have the privilege and power to change things, because they're in the room and we're not. Like the generals carving up Africa because they happen to be in the right room. Personally, I think these decisions have fallen to a few people in a room for far too long. I think we should have public, wide ranging discussions about the nature of how we build the underpinnings of our world. If we don't, the consequences could be more "all-or-nothing" that ends up harming more than otherwise.