To me the key idea from Brad Smith's post, which I don't neccessarily agree with, was this:

        Third, there should be an exception to this approach for citizens who move physically
	across the Atlantic. For example, the U.S. government should be permitted to turn
	solely to its own courts under U.S. law to obtain data about EU citizens that move to
	the United States...

What he really arguing is that EU should not invalidate the Safe Harbor in that it breaks the Internet and Microsoft will provide its customers data access for U.S. and EU governments under "in the most limited circumstances". In that sense, it's not something out of ordinary than what typical Microsoft's position is in this issue. They can certainly do better than that, I.E. throwing away the server side encryption key like Apple does for iOS devices so that they don't have the technical capability to give out user data even if summoned to.