They could have, however the timeline the regulators gave Microsoft to comply was incompatible with the amount of work required to build such system. With a legal deadline hanging over their heads Microsoft chose to hand over the keys to their existing tools.
^ This statement cannot be accepted without proof. It sounds outlandish and weird. Which regulator? Under what authority. Also Microsoft doesn’t listen to ANYBODY.
I've seen this stated before, but I haven't been able to find reliable data on when regulators required Microsoft to provide the access that they provided, or whether there's been time to provide a more secure approach. Do you know?