I would hope most privacy conscious people disable iCloud, but that’s another story.
You can setup secure encrypted backups, but the customer losing the key means losing the back so that’s not what consumer focused companies are going to do. In other words any backup service that doesn’t have big warnings that losing your key loses your backup means they can read your data.
"The mud puddle test: You don’t have to dig through Apple’s ToS to determine how they store their encryption keys. There’s a much simpler approach that I call the ‘mud puddle test’"
[1] https://www.apple.com/child-safety/pdf/CSAM_Detection_Techni...
To be clear each image, the image’s NeuralHash, and a visual derivative are uploaded to iPhoto. This allows for the inspection of the NeuralHash algorithm used which I actually prefer.
The phone isn’t downloading the hash database.