For example, I know a major hospital/research center who has said that they will 100% never let anything onto the public Internet, but are about to clear use of a Microsoft private cloud.
until they run a private fiber [which don't also have NSA's splitters attached] directly to the MS datacenter, they are being sold a snow in Antarctic [ie. mutually exclusive dichotomy between "100% never let anything onto the public Internet" and "use of a Microsoft private cloud"].
We are happy to talk about the actual location of your data for privacy purposes: http://www.windowsazure.com/en-us/support/trust-center/priva... I don't know how often this is actually done, but it's not out of the question that a large customer might prefer to run their own fiber to our datacenter(s).
http://arstechnica.com/business/2012/04/a-sysadmins-view-of-...
Re the NSA splitter issue, that's just a reality of life. If you've run a large email, backup or similar system for a length of time, you've inevitably come across requests from law enforcement or litigating attorneys for data. So don't assume that nobody is accessing your stuff because it's in a room in your building.