Many countries fail to provide their citizens with digital identification while enforcing age limits and such, but at least most of Europe will have solutions for both of these soon. Plus, "complying with the law threatens my bottom line" has never been a reason to ignore the law anyway. If restaurants were run like internet companies, people would die of food poisoning every day because "it'd be too much of a burden to check if _every_ ingredient is in date before cooking".
This proves that the laws they write are actually quite possible to achieve. It'll happen at the cost of some freedom and many of the nice things about the internet in general, but if you're a businessman looking at business potential and don't care too much about artistic creativity, the impact is actually quite minimal. I'm glad UK and US companies are hiring the most incompetent and useless "verification" companies out there to punish the government through a weird form of malicious compliance, but that won't last.
> Want to deem whether content is allowed or not? Fine, provide an API that allows content to be scanned and return a bool.
https://www.iwf.org.uk/our-technology/image-intercept/ exists for the UK, https://www.web-iq.com/solutions/atlas exists within the EU, https://projectarachnid.ca/en/#shield exists in Canada, https://www.microsoft.com/en-us/photodna exists worldwide, as well as https://developers.cloudflare.com/cache/reference/csam-scann... and https://get.safer.io/csam-detection-tool-for-child-safety. Someone even made an open source, CLIP-based tool that doesn't require hashes and can be tweaked in all kinds of ways: https://github.com/Haidra-Org/horde-safety/blob/main/horde_s...
These mechanisms not only exist, governments try their best to convince people to use them. I don't think you'll get away in court arguing that there is no accessible service for you to use. What happens when you fail after applying one of these services is up for debate, but so far, laws just want you to try your best to prevent abuse, and existing services are enough for that.
> Want to age-gate content? Fine, provide an identity service.
This is a problem now, but privacy-safe age verification is rolling out across the EU in the coming years. This is actually a super easy problem to solve when the government puts in the bare minimum amount of work. A decent argument against the UK/US/etc. but not so much so for an EU member state like in this court case.