Re: OK, let me get this straight..
"But if you call them directly with the question as stated you will get an answer that ought to worry the cr*p out of your company lawyers"
Our organisation outsourced to MS - specifically because their servers are inside the EU.
Google refused to warrant server locations and the lawyers made it absolutely clear that this ruled them out because the safe-harbour agreement was already proven to be shite.
Most IT staff opposed outsourcing, but the orders came from on high that "it shall be done". The org spent more than £5million migrating all the internal mail systems to be able to move to Outlook's "free" service and ISD has been officially prohibited from having an exit plan in case it goes titsup.
Anon for obvious reasons.