I am not sure who operates the Office 365 service, but the knack for Azure in Germany was, that Microsoft passed all operation of the service to T-Systems (i.e. Deutsche Telekom), which would technically protect the data from the CLOUD Act. The location in Magdeburg that is mentioned in the link is the same as for their other cloud offerings.
The problem is, that according to this article (heise News, in German) this product was not well received, and it’s probably “just” a business decision to phase it out. Another article on the same site discusses the inherent conflict between the US CLOUD Act and the European GDPR. If Microsoft operated Office 365 on top of T-Systems Azure, I guess they where in a catch-22.
