I'm assuming the CLOUD act is the entire reason why they're explicitly going with European-only staff.
That way Amazon can honestly say it has no operational control to violate EU law because there's no American employee they can command.
Operational control isn't all-or-nothing. European employees will do whatever Amazon tells them unless it breaks European law, in which case they won't. Amazon is intentionally setting it up in a way that it won't be able to do anything about that.