You're right that a "European Cloud" has been a 'dream' for a long time. But I don't see the reasons you cite (regulation) as a cause of impediment.
And you slightly mis-parsed my words. A migration of cloud services from US providers isn't the same as to a "European Cloud". Canada, Australia, India, Vietnam, South Africa... there's a whole world of nominally friendly and economically viable suppliers out there. What matters is moving from Microsoft, AWS, Google and other services that cannot be considered "safe" any longer.
I notice from your profile you're an AWS disciple. You must know AWS want to build a "Euro Sovereign" division? Not that I think it will be successful, but look at which way the wind is blowing.
> Canada, Australia, India, Vietnam, South Africa... there's a whole world of nominally friendly and economically viable suppliers out there
Where generally EU-based businesses aren't allowed to move their cloud infrastructure either.
With the US and Privacy Shield there at least used to be an agreement in place. While that agreement was frivolously nullified by EU courts, at least so far authorities haven't been overly eager to enforce that, probably because they know that'd put pretty much every EU-based company out of business.
Have fun trying to convince zealous bureaucrats and lawyers that hosting your customer data in Vietnam is fine for an EU-based business, though.