> On the other hand, this sort of preservation does substantially reduce user privacy,

Yes, that's by design and already hundreds of years old in practice.

You cannot refuse a court evidence to protect your or anyone else's privacy.

I see no reason to make an exception for rich and powerful companies.

I don't want a party to a suit having the ability to suppress evidence due to privacy concerns. There is no privacy once you get to a civil court other than what the court, at its discretion, allows, such as anonymisation.