[rtpg]

Could you expand on how this non-distinction could lead to bad things for citizens?

Before a warrant, this non-distinction protects you, because this would be taken as a search of your personal effects.

If there's a search warrant, then the government has the powers to search your effects independent of where they are, so nothing's really changed and it aligns with the spirit of the law (instead of trying to hide behind technicalities).

[rayiner]

The law is rooted in "[objectively] reasonable expectation of privacy." Someone who is technically ignorant can't see past the layer abstraction presented by the software: a file on cloud storage appears in the photo viewer alongside files on the local flash memory. But the technical reality is that cloud data is exposed to potentially hundreds of people at the ISP and service provider. Not only that, but potentially data-mined on top of that. Only if you're technologically ignorant of this fact could you reasonably expect that the data is really private.

Look at it this way. If your pot growing operation is visible from your neighbors window (just one person!) we say you can't reasonably expect privacy. Dillon v. Sup. Ct. How can we say data visible to your hundred closest sysadmin friends at CloudCo is private?