In Canada we have laws that protect personal health data. For instance my doctor cannot save my patient data outside of the country. This is a major pain for SAAS vendors, and I understand google's position. However, as a patient I appreciate knowing that my personal health data is not being sent around the world to other jurisdictions that may not have the same privacy and data protection laws that we do here.
So, I have to wonder do we have a problem of countries requiring local storage for reasons that are questionable? Or is this simply a preemptive strike ensuring companies like google continue their easy access to global markets? Given my example above I suggest its the latter.