The clearest end point for this is some government issued digital ID that just asserts who you are, acts as a login etc.
You can see this as a stepping stone to there. if you squint.
Is it the idealism of the 70s coke to life? No. Is it some sane compromise - I think so.
What if we cannot trust our government ? Sorry it is pretty sure that no internet is going to solve that. That's on the real world.
This is not going to work. The governments will create millions of fake identities to spread their propaganda, same way as they are making fake passports for spies.
And that's for morally ambiguous cases where the justification is popular and well established things like crime fighting, child porn and so on.
We don't know what will happen in future, but given the story so far, the chances of these companies saying to governments, sure, have 500,000 free accounts so you can spam our users with incompetent political propaganda, is virtually zero.
The chances that they would comply with future government requirements cannot possibly be "virtually zero."