harddrives have a finite service life
Correct.
For typical enterprise-grade drive, warranty are in the 5 to 10 years range.
So you can expect them to last that many years at minimum.
So if the bubble pops in 18months as was suggested in the post above, those drives will even still be under warranty, and definitely have quite some life left in them.
and those used in cloud providers are recycled not resold or reused.
...by an normally operating company, where there's somebody who will be held accountable for whatever happens with these drives: yes.
(They'll most likely destroy the drives to avoid any hassle regarding confidentiality, then recycle)
BUT, when a company goes bust, and everybody got laid off, nobody will be around to take care that proper procedures are followed and each drive has a drill shatter its plates. There's no employee left that could be held accountable if the drives "end up in the wrong hands".
Instead the company's assets will be acquired by some debt collector (who isn't bound to the same procedures of data handling), and liquidated in any way that would allow the investors to claw some money back.
That's how you end up with proprietary game dev kits on e-bay after some studio goes bankrupt.
At best there will be a proper bankruptcy auction, and the company handling the liquidation might even put some nomial effort in erasing the drives before putting them on sale.
At worst, everything will be sold by the kilograme to some scrapper, who'll find and single out any valuable to put on eBay like the drives. These will be probably sold as-is with their data content left untouched.
The big buyers are AWS, Google and Azure
The big ones, yes.
But currently there's a whole zoo of newer companies that specialize in building AI datacenters exclusively. Those one will almost definitely go belly up once the bubble bursts.
Of course the big three will try to salvage whatever is trivial to acquire and re-use in the subsequent firesale (buy a whole warehouse including the convenient palettes of easy to reuse hardware abandonned in there). But whatever is too cumbersome to buy will go to the scrappers and end-up on ebay.
if you expect any of them to go bankrupt anytime in the next decade I have a bridge to sell you.
Side note:
I don't know, but Microsoft seems to be on spree to enshitify and run into the ground pretty much everything they produce. (see controversies around Windows 11's unwanted features (Copilot, Recall, etc.), Europe's unease with Microsoft's ability to spy and/or cut you off Office 365 (see: ICC), and similar dumpster fires).
I don't promise anything, but there's a slight chance they run out of profitable businesses to subsidise all their failing ones at some point in the comming decades.