Edit/note: The main point AWS makes is indeed by whom/where this offering is operated. But, Microsoft stated that even though they made an environment so that the data lives entirely within the EU they may be compelled to transmit the data back.
This issue can be resolved on the European side by effectively making the transfer of EU->US data illegal and, if detected, nationalizing the entire EU subsidiary of the US company. Would this trigger a US-EU war? Certainly, but only the blind cannot see that relations are no longer those between two allies.
Not a lawyer but from what I understand the EU law makers are acting in response to US behavior. The US has laws intended to protect US citizens that do not apply to foreigners, a system where money buys access to anything and a lust for hoarding data. Meanwhile in the EU people use US tech for everything, probably for various not very good reasons. It's kinda sad really, it should have just been properly organized. US Tech companies should really have the customers and the EU the services.
Transcribed (not translated): https://www.senat.fr/compte-rendu-commissions/20250609/ce_co...
Video: https://videos.senat.fr/video.5460497_6847c70b82594
Reports by third parties:
https://www.theregister.com/2025/07/25/microsoft_admits_it_c...
https://www.forbes.com/sites/emmawoollacott/2025/07/22/micro...
Edit/note: The main point AWS makes is indeed by whom/where this offering is operated. But, Microsoft stated that even though they made an environment so that the data lives entirely within the EU they may be compelled to transmit the data back.