The US had an entire decade of war on cryptography that was literally required to safely transact on the internet, and yet the 90s had plenty of online store startups.

Granted the chat control issue, is unfortunate on the privacy front, however I wouldn't call it a hindrance on innovation.

IMO, often innovation happens because it is motivated to work around rules and regulations. So in many cases regulation and rules are what drives innovation. People want to hack the system and thus have to innovate. A completely hacked and open system doesn't really inspire new ideas, because the old ones just work fine already.