Photo hosting services been scanning md5 sums of a database of known criminal images for 20 years. They did that on telecom and isp's since 2000'ish. Google/Apple searched your cloud for mp3s or torrented movies also.

Now Apple just moved the search to the OS via an API call to its server, and people are noticing the traffic.

When I worked in telecom, if there was a hit on an image it was reported to legal. Legal contacted the feds. Feds contacted the local PD of the user. The PD would send a cop in to pick up a burned cd. The server would zip all the users data and burn onto a dvd. We wouldnt touch the dvd, the cop would walk into the datacenter and hit eject and collect the dvd. No chain of custody issues.