That is a very different thing, if it was the companies data it matters not where the data is they have to produce it. This is about Microsoft trying to comply with an order for somebody else's data that is not under their control but they do have access to.
I run an IT business, this is much like getting an order to produce a clients data. Can I technically do it sure. If it was in the US I'm covered legally via the judge made me do it and possibly a gag order precluding me from disclosing that we did so. Now if it's foreign I'm committing a crime and do not have legal cover, some of us still want to leave the US from time to time. In neither case should my company be compelled to deliver that data, it's not ours to give. Doing so has the potential to ruin business relationships. Having it be the law in the US leads to no foreign company allowing a US one access to it's systems.
It is not hard ask an Irish judge to issue the order to Microsoft EU (or whoever). It seems they do not think disclosing this data would be legal in the EU and the request would be denied thus this end run. The US can and does get just this sort of thing all the time the EU just has better protections and thus a higher bar to meet to avoid fishing expeditions like this one.