... And in not protecting against server operators (hostile or not), it doesn't protect against government or even foreign government (see US and even foreign corps required to gather SWIFT data by US law enforced on other nations, despite European data directives, etc).
The ONLY way to protect even customer /friendly/ server ops against such government intrusion is if there's simply no way for them to get at the data, period, meaning they must only have access to the encrypted blobs, period, and if they're friendly, they don't even WANT the chance of seeing the unencrypted data, since then they could be ordered to provide it.
Client-side encryption and audited open source code to ensure no backdoors is the only way for a service provider to protect /itself/ against such forced government, even foreign government, cooperation. If all they get is the blob, they can happily turn over the blob, but that and possibly account info is all they have to turn over, which is exactly how a good company will want it!