I think we underestimate just how difficult it is just to replicate existing services, let alone keep up with the innovation.
It's like the Argentinian effort to stimulate its own computer manufacturing by banning Apple products.
That is completely unrelated though. The only thing this ruling confirms is that you can not process data of EU residents when you can not be adequately protect them due to local laws i.e. the CLOUD act. If your laws allow you to keep the data safe, you can offer your cloud services to the EU market as much as you want. If they wanted to, the US could easily allow companies to guarantee those protections too.
I would not be surprised when, if no solution is found, some of the major cloud providers in the EU end up being e.g. japanese, israeli or canadian.
Careful, there is such a thing as network effect for knowledge. More fractured systems mean more different approaches means less aftermarket documentation means less people being able to work for you.
And that totally fine, if you think European companies have no competitive disadvantage on the global market to being forced to use traditional VPS providers or build and set up everything themselves. But I imagine it'd be very challenging if other companies outside the EU can go to market faster, deliver better services for lower cost, etc. than their European counterparts because they can use American cloud providers like GCP or AWS.
The US is "allowed" to offer whatever it wants for people to move there.
