Subsidiaries are a core part of international business and one important part of this is that a subsidiary is a legally distinct entity. This means, amongst other things, that it must adhere to the local laws and regulations and also that its board must act in the best interests of the subsidiary, even if these are at odds with the best interests of the parent company.
In this case, if I am understanding it correctly, the data is stored and managed by the local subsidiary, and not directly by MS in the US.
I am no legal mind but it seems as though such a ruling would contradict the basic, legal principle of a subsidiary and thus undermine much of international business.
I mean, look at it from the other side - a subsidiary can engage in practices are legal in that country but might be illegal in the parent company's country. The parent is safe. This is why manufacturing companies can happily use CFCs and engage in all manner of ecologically unsound processes in their factories in developing nations but their US operations are not fined prosecuted.
If the local subsidiary of MS is refusing to provide access to the data, this may well be against the US laws, but they are not bound by those laws and, as a separate legal entity, Microsoft's US operations are not liable for that.
Happy to be corrected, but that is my understanding of the situation.
Biting the hand that feeds IT
