DIDs by themselves don't normalize KYC. They are just key holder documents. There are other DID:methods that use the bitcoin blockchain as well, so that doesn't really do much.

But companies and governments can build KYC on top of them.

It's just like how government can force everyone to use Bitcoin to surveil every transaction everyone makes. Government can do that in many ways. It doesn't need bitcoin to do it.

If voters let governments/companies do use decentralized stacks for their benefit, they will.