A group of agencies in Sweden have set up a project to find cloud providers who can provide an alternative to MS Teams/O365 following the Schrems2 decision [1]. Similar work is ongoing in other EU countries. Will more US software providers find partners in the EU to run cloud services in a way that doesn't involve risk of handing over customer data under FISA 702? There is definitely a huge need for compliant cloud solutions in the EU.
[1]: https://computersweden.idg.se/2.2683/1.754943/swedish-gov-teams-alternative
From the little knowledge I have about this, it might not even be enough for MS to guarantee that the no data leaves EU borders but simply the fact that MS is a US company could be enough for US courts to force them to exfiltrate data. Not sure if this is correct or if they already have a company structure in place that would prevent this.
As much as I would like to see more competition thanks to this, I think at the end MS will figure it out and they will remain the dominant force.