Text watermarking has no effect on output quality, it just works by changing the explicit source of randomness that is in practice always present in LLM output sampling. See for example https://www.seangoedecke.com/ai-text-watermarking-is-not-a-b....
This is hilarious this keeps being repeated by the true believers ad nauseam.
Also, don't apply EU law to the world. It's a knee jerk reactionary regulation by a bunch of aging ding dongs that can't print their emails.
> Text watermarking has no effect on output quality
It has an effect, and it's negative. It's hoped that the effect is negligible, and it probably is, but the whole point is that it has an effect.