They’ve already done both. When they can get a cooperative party (AT&T, for example), they colocate their splitter equipment. When they can’t, they tap undersea and overland cables.

When it’s a hostile environment entirely, they hack and do secret operations and bribe.

The data would/should be encrypted; while the NSA did successfully tap Google's inter-datacenter traffic before the Snowden leaks, since then it is encrypted, too. Hopefully other providers won't fall for that trick anymore, either.

IIRC, Google addressed the incident you're referring to by adding E2E encryption to sensitive inter-DC RPC sessions, rather than by fully encrypting inter-DC traffic at the link level. It would be nice to be able to reasonably expect carrier/ISP backbones to be secure against this threat, but in our actual reality this seems like fantastical thinking.

> Google addressed the incident you're referring to by adding E2E encryption to sensitive inter-DC RPC sessions

And they don't provide the key to law enforcement because ... they care about your privacy. /s