Surely they could....
...of got around this by creating a new business that was registered in the EU but based in Ireland and linked to MS. Because it's then not a US registered company, surely US laws can't apply to the data storage arm of MS then, as it would be a separate EU registered company.
Much how it looks like, I could be wrong, Alphabet was created by a certain company to avoid tax.
It's Team America - World Police again.