No, it doesn't. All it means is that Europe will become even less relevant in tech than we already are. Just because European companies can't do behavioral targeting doesn't mean companies outside of the EU can't do that and the EU has no jurisdiction over them, if they can even find out that this is going on in the first place. All it will mean that European tech companies get out-competed.
Another thing you're not considering is that the EU has 30+ languages in it. I'm sure it will be great to see advertising in languages you can't even read. That will drive home the point that only France and Germany matter even more.
>Meanwhile, companies still have their advertising budgets; they'll just have to spend money on untargeted ads.
Advertising budgets don't exist in a vacuum. Their size depends on how much money they can make based on those ads. If it costs more to advertise than it brings in as sales then you just don't advertise. If targeted ads aren't a necessity then neither are online advertisements.