It's E2EE (only if you turn it on, which you can't do in the UK) but it saves (non-encrypted) the hashes of the plaintext of the files to Apple (presumably for dedup).
This allows Apple to see which sets of users share unique Winnie the Pooh memes. They know who had them first, who they sent them to, and when.
The E2EE is useless with such unencrypted metadata leaks.
