Beyond the crypto architecture debate, I don't really understand how could anyone imagine a world where MS could just refuse such a request. How exactly would we draft laws to this effect, "the authorities can subpoena for any piece of evidence, except when complying to such a request might break the contractual obligations of a third party towards the suspect"? Do we really, really, fully understand the implications…
By simply not having the ability to do so.
Of course Microsoft should comply with the law, expecting anything else is ridiculous. But they themselves made sure that they had the ability to produce the requested information.