It's an interesting situation. I wonder if Apple will bend over and give up user's privacy, or will exit Australian markets. Google and Amazon will definitely sell out the users. (and I'm not an Apple user)
Apple already operate data centres in China without privacy controls - seemingly happy to provide full government access in exchange for access to a lucrative market. Google currently have no operations in China.
Apple's users in China don't have an expectation of privacy. Chinese consumers have never had a web service offer privacy, and therefore don't expect it. Apple running a priavcy-less service in China isn't violating the users expectations, as long as they don't ever claim it's private or secure.
Australian users however do expect privacy. They do expect that their chat messages will only be read by the recipient and not the government.