There simply MUST be a clear distinction maintained over where something is located, or country borders don't mean anything.
The question to ask is, is the data stored in another country as easily available to a
Microsoft employee in the USA as data stored in the USA would be?
There's a compelling argument, and multi-national corporations in particular make themselves vulnerable to it, that if you ignore borders in your day-to-day operations then you can't exactly point at the border as an insurmountable issue when someone is making you do something you don't want to do.
The recent case where a Canadian court ordered Google to censor results globally is another example of this. People argued that the court only has jurisdiction over google.ca results, but conveniently forgot that google.ca is hosted in the exact same server farm as all Google search services. So where do you draw the line? Surely not where the corporation decides it's convenient in that particular instance.