Those are not equivalent statements. You're assuming that privacy is a one-dimensional quantity, so that anything that complies with "the strictest international privacy laws" automatically also complies with any other privacy laws. But this is not actually true. It can easily be the case that every national law allows some set of behavior (different sets for different legal systems), at the same time that the intersection of all those sets is empty.
I think that's uncharitable. Apple prefers not to have the data either, hence the preference for on-device processing.
But this is solvable. The problem is the work it takes to solve it isn’t worth the hit to time to market. (And possibly even the cost.)
I could almost feel sympathy if it were something to do with some contract that Apple signed with their AI provider. Who's that, Google?
Ahh, a "competitor"? Yeah... cry me a river.