You're right, it's not the government's job to protect business models, particularly if they are considered harmful. A sensible government would probably want a healthy environment and market for companies to operate it, but exactly what that means is clearly something on which governments can radically disagree.
So I admit that the US is entirely within its rights to create a law that makes it impossible for cloud providers to simultaneously operate in the US and the EU.
It's still be sad though that the two major democratic power blocs in the world can't agree on something like this.
You're right, it's not the government's job to protect business models, particularly if they are considered harmful.
That's a convenient way to pass the buck, but the reality is that this is why we can't (any longer, lawfully) have nice things.
It's particularly hypocritical in this case that the EU itself is a facilitator of its member states' security services getting access to personal data in ways that would otherwise clearly violate its own privacy laws, yet it objects strenuously when other countries do exactly the same thing. There is no principled ethical argument at stake here. It's all about who has the power and everyone trying to grab more of it than they're really entitled to, instead of acting like grown-ups, recognising the limits of their own authority, and collaborating with others in areas of genuine mutual interest when there is wider international agreement on certain principles.
Perhaps we need another exercise in shutting everything down, to show how much the general public and the businesses in each place stand to lose if this chest-thumping carries on. Just choose a random week and then firewall off every US-based social network in Europe, fine any US-based financial services businesses that do any sort of data processing of EU individuals, and so on. And then a few years later, once the inept politicians have been replaced and when the catastrophic economic damage caused in just that one week has started to heal, maybe we can get back to a more sensible approach to the whole issue of international relations in the age of global communications.
So I admit that the US is entirely within its rights to create a law that makes it impossible for cloud providers to simultaneously operate in the US and the EU.
It's still be sad though that the two major democratic power blocs in the world can't agree on something like this.