The quick answer is that you only return $line and not the entire file, but there are some other significant issues with the code. You also reset the variable $line twice within the subroutine, and it's not scoped properly.

Although you can sort of get away with what you're doing here (calling a file within a subroutine that isn't properly scoped to that subroutine), it's hard to read and prone to bugs.

A better way to think about this is to address the fact that the subroutine operates on a single line at a time, and not the entire file.

Don't shoehorn in the file operation as well since it doesn't make logical sense. Instead, pass the subroutine a line at a time since that is its logical 'scope' (as distinct from the lexcial scope).

open (IN "<...") or die("...");
open (OUT ">...") or die("...");

my $line;

while ($line = <IN>) {
    print OUT replace($line); # you could drop the $line and use $_
}

close IN;
close OUT;

exit 0;

sub replace {
    my $line = shift;

    #skip the comp since you're printing out newlines
    $line =~ s/data|=|detector//g;

    return $line;
}
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I think that'll do it.