Therefore, all corporate tools must be specific for one purpose when managing PII, and no tool should allow free-text fields. Excel, Access, notepads shouldn’t exist in companies.
Office 365 is cloud based, that's what makes it potentially non-compliant. Having Excel in your company, on your computer, and the data never leaves that computer is a totally different scenario.
A theoretical methodology to do so is not enough to make their spyware legal.
There are alternative products that can do almost everything Excel does in almost every real life company without consuming data like the Very Hungry Caterpillar. It's up to them to prove why they need all that data that others don't need, and in what specific ways this data is used for the good of the customer.
Microsoft will need to act and change to solve this problem.
I doubt the EU can prevent MS365 from being used, and MS can say "we aren't paying a fine here. Ever. Good luck with it."
Who will succeed? No idea.