I get this completely, although let's say Microsoft just ignored their requests for compliance. Would the EU seriously dare to ban Windows? I feel like they'd get outrage from their own locals and topple their own economy if they banned Windows, so they probably wouldn't. Therefore, does Microsoft need to care? Could they just sit around in Redmond and keep developing as long as the US doesn't care?

As for websites, some countries could just block a US website that doesn't comply with local regulations (e.g. China, Iran, Myanmar, et al.) and this has happened numerous times. But the EU? Having already reached a free speech society? Censoring a US website on the grounds of non-compliance with arbitrary one-sided demands would be at odds with their own established bill of rights.

Google said "to hell with it" to China and got blocked. But what if they did the same to the EU? I don't think the EU could block a website without causing serious upheaval from their own citizens.