We already do this. My prior uni got hacked, everyone's IDs/drivers licenses/passports, mails, data got leaked. The vendor was a 4-person third party cloud provider who had all of the necessary security certifications for the uni to avoid gross negligence. No-one paid anything as the 4-man firm went bankrupt and the uni got a new provider who is fully licensed to avoid gross negligence.
With software, you can stack these shells of proxies almost for free.
Even given this, the industrial exemption is not getting rid of currently with status quo. So the worldview is not really valid until it is.