They can use the model and the data and requests all stay in the EU region. As opposed to sending to Anthropic, Microsoft or Google. Granted, those companies can assert that data will stay in the EU region too, but they'd have to be believed, which, some may find tricky lately.
Thanks to the CLOUD act, its pretty irrelevant where the data is as long as its owned by a US entity.
The government can just force release, even if it's on European servers.