How can Google and Microsoft comply with these requests and still claim that the emails they data held in Ireland is exempt?

Moving on, what if blasphemy is illegal in another country and they (Google, Microsoft) spots someone who sent a a private message to someone else where they are making jokes about the prophet of Islam? What about countries ass-bent like India where you can't say anything bad about politicians? Will Google volunteer data about people who make bad jokes about politicians in private?

I know it sounds ridiculous but you're right. Where does the slippery slope end?

Problem is that on the other end... if they don't do this then they will have a PR nightmare. If people can spin their services as a safe haven for pedophiles, they will have a hard time.