I can choose what I put in the cloud and what not. The same can be said about Twitter/Facebook/etc. If I choose to put something in the cloud that is not E2EE, I have to be aware that someone can access it. I either accept that or switch to a provider that allows E2EE (check Devon Think).
Apple is implementing a functionality to scan data deep into the OS. You can not undo this, it's there. For now, it's applied to photos and for now you can opt-out, but it can be applied to any document on your device with a flip of a switch. I have confidential government information on my devices, think about what could happen. I can encrypt data on my device, but when I access it, so can Apple. Also don't forget you can't block this, as Apple has implemented functionality in the past that allows them to bypass local firewalls, so traffic to/from Apple servers can't be blocked anymore. You'd have to use an external firewall.
Arguments are made that this happened in the past with searches and virus scanners. Sure, the difference is they don't report back to Apple (or anyone else) about the results and that makes all the difference. It's hard to implement specific technology into the OS without resistance, it's much easier to change its behavior. Apple is using the CP excuse in order to take the first step. And once it's deeply embedded in the OS, the damage is done.
Also, there's no reason not to do it in the cloud. As long as they don't have E2EE they can scan iCloud. Once they offer E2EE the whole thing won't work anymore. They say they're manually reviewing results in case an account is flagged. How are they going to do that with E2EE and without a direct backdoor to a device? It's not possible.
More food for thought:
https://www.hackerfactor.com/blog/index.php?/archives/929-One-Bad-Apple.html,
We'll see where the whole thing goes. It's not going to fly outside the US. We also might be able to do something about it. Then we can send adversarial examples to other people and watch the outcry. But until all these questions are answered, Apple is on my blacklist (and I've used and worked with them for decades).