Then the people in the US would be sent to jail for contempt of court. Doesn't make sense, but that is how it works.
The court's argument could be that MS should be required to design their systems to make it possible to comply with their requests.
The court's argument could be that MS should be required to design their systems to make it possible to comply with their requests.
This is why Microsoft are in a Catch-22 situation, and why the correct solution for Europe is probably to just stand their ground until the US realises it has gone too far in expecting its laws to apply to the whole world and is now asking the impossible at the expense of its own business community.
(Assuming the US court claims jurisdiction, which is more or less what this case is about)