The reason why the physical location matters, besides latency, is that certain governments have laws in place that allows them access to any data in their territory.

In the case of EU countries (I think its part of gdpr), services that handle personal data need to make sure that that data stays safe. The only way they can do that is to make sure that the data stays in a certain region.

I think that is why op is advocating for stronger laws. Due to lax privacy laws in the US, it's impossible for European companies (and other privacy concerned companies) to host their data in the US, therefore your missing a share of the market