And, just as an example, shouldn’t it be illegal for MS to view your private photos?
Should it be legal for law enforcement to rummage through private belongings in search of contraband, drugs or explosives? I specifically say law enforcement, because people frequently complain about them. Assuming we agree that they have a right to search, let's go further on this.
Namely, if you see somebody acting suspiciously, should you report it or not? Should you intervene in any way? The reason I'm bringing this up is that you may be held liable for aiding the perpetrator if you were the only witness and there was no way for you to not notice the suspicious activity.
Same goes for every cloud operator. If a trial finds that a specific cloud storage service was used to disseminate illegal data, you can be sure that prosecution will follow up on this and go after the operator to check if it was possible to prevent this.
And it makes perfect sense. Otherwise corporations could not be held liable for individual employee illegal activities (for instance, participating in corruption).