Haven´t found a way to edit the collation for the whole instance on SQL Server. I have seen the default one is SQLLatin1GeneralCP1CI_AS.

Among other things, this affects to TempDB collation and all the rest of system databases. Now let's imagine we want to create/import an user database with a different collation, I want that the instance collation (hence Tempdb) to be aligned with the user database collation.

Not having this option could bring performance issues in the future (tempdb is used by SQL Server Query Engine and queries execution plans), so it means automatically discarding Cloud SQL as an option.