iCloud is not end-to-end encrypted, and Apple has not announced plans to add that option. Apple has the technical ability to scan images on the server.

iCloud (at least for photos) is (effectively) "end to end encrypted". All photos are encrypted or decrypted only on the device (or after being downloaded to a browser), they never exist as human viewable files on iCloud. No one, except the owner of the account, can decrypt the file. This is why the checking for illegal file has to happen before they are upload. It cannot be done on the server, the encrypted file can never match the hash. What Apple has done that is real genius is that for each image identified as illegal, a part of the key is encrypted and sent with the file to Apple. After a threshold is met, the account is locked, the user notified of the appeals process, and Apple can decrypt and have the files verified. 1 or 2 false positives changes nothing.

Yes, they have the ability, but they found a way NOT to do that. Instead maintaining user privacy. And the world hates them for it, and would prefer they just unencrypted and scanned everything… doesn’t make sense.