The US legal system starts and ENDS at the US borders.
Maybe in principle it does, but it practice the sovereignty of any country is whatever that country can enforce it to be.
You seem to have completely misunderstood this situation, For example your safe deposit box example, if the US wanted the contents of a safe deposit box in Europe they cannot legally seize it, doing so would be a violation of europan law and the US officials doing it would be guilty of bank robbery and treated like any other common criminal.
That very-much depends on the details of the situation. Suppose the US wants the contents of your German safe deposit box.
If the US sent some agents to Germany without cooperation with the German government and they broke into the bank and were caught, then sure they would be arrested and treated as criminals (assuming they lacked diplomatic status), as in your fantasy scenario.
However, they would never do this.
Suppose instead you are in the US on vacation. The US grabs YOU and puts you in their own safe deposit box until you hand over the contents of your box in Germany. It is true that they might not have the means to FORCE you to comply, but they can literally hold you in prison until you die of old age without even charging you with a crime if you do not.
That is the more appropriate analogy here. If MS wants to avoid being subject to US law they should probably avoid having so much of their property in the US, where it is trivially seized.