> It's not clear what the limiting principle there would be -- could they order Microsoft to retain any of the data on everyone's PC that isn't in the cloud, because their system updater gives them arbitrary code execution on every Windows machine?
My understanding is it's closer to something like: They cannot order a company to create new tools, but can tell them to not destroy the data they already have. So, in the question of MS having the ability to create a tool that extracts your data is not the same as MS already having that tool functioning and collecting all of your data that they store and are then told to simply not destroy. Similarly, VPNs that are not set-up to create logs can't keep or hand over what they don't have.
Laws can be made to require the collection and storage of all user data by every online company, but we're not there -- yet. Many companies already do it on their own, and the user then decides if that's acceptable or not to continue using that service.
If the company created their service to not have the data in the first place, this probably never would have found its way to a judge. Their service would cost more, be slower, and probably be difficult to iterate on as it's easier to hack things together in a fast moving space then build privacy/security first solutions.