Here is an analogy;
I rent a locker at a local storage locker company.
The guy with the locker next to mine, fills his with drugs
What happens next?
This is nice, but doesn't actually identify the problem.
The problem is, when you put an item in a safety deposit box at the bank, if the government wants to know what's in it they serve a warrant on you. Not on the bank, who may or may not defend it, and with varying degrees of vigor.
When you replace safety deposit box with server, item with data, and bank with cloud service provider, the equation has not fundamentally changed...but the answer has.