The bad stuff will just move somewhere else as it always has done.
Compromising everyone's privacy will eventually mostly affect innocent people. Or even cause the platforms to cease existing altogether, which looks like a real possibility with Signal. Pedos will just move on to whatever service isn't compromised yet. You can outlaw or hamper secure encryption in some jurisdictions, but due to the generic nature of computers you can't in principle stop people from using secure encryption.
Smartphones are general-purpose computers with a bunch of little digital locks, that while strong, are not impervious. Such locks, when used to protect a device owner, are good. The same type of locks, when used to deny a device owner full rights to use their device as they see fit (absent harm done to others), are evil.
They could however require a license for a compiler/interpreter, and then require binaries to be signed by said compiler. As you said they seem clueless, so I bet they will try.
Compromising everyone's privacy will eventually mostly affect innocent people. Or even cause the platforms to cease existing altogether, which looks like a real possibility with Signal. Pedos will just move on to whatever service isn't compromised yet. You can outlaw or hamper secure encryption in some jurisdictions, but due to the generic nature of computers you can't in principle stop people from using secure encryption.