Microsoft: Legal Battle of Overseas Data

Microsoft Corp. (NASDAQ: MSFT) and many other companies do not have to turn over customer emails stored on servers that are outside the US due to a 4-4 vote by the 2nd U.S. Circuit Court of Appeals. This was a victory for privacy advocates, and for technology companies offering cloud computing and other global services. But the judges said the decision by a three-judge panel could hamstring law enforcement, and called on the U.S. Supreme Court or Congress to reverse it.

Peter Carr, a U.S. Department of Justice spokesman, said: “We are reviewing the decision and its multiple dissenting opinions and considering our options.”

In the July decision, according to Reuters, Circuit Judge Susan Carney ruled that Microsoft could not be forced to turn over emails sought for a narcotics case, but stored on a server in Dublin, Ireland. Though Microsoft is based in Washington State, Carney said the emails were beyond the reach of domestic search warrants issued under the federal Stored Communications Act, a 1986 law. Microsoft was thought to be the first U.S. Company to challenge a domestic search warrant seeking data held outside the country. The case attracted significant attention from technology and media companies concerned that a ruling for the government could jeopardize the privacy of customers, and make them less likely to use cloud services if they thought data could be seized. Microsoft’s position was supported by dozens of technology and media companies including Amazon.com, Apple, CNN, Fox News Network and Verizon Communications, as well as the American Civil Liberties Union and U.S. Chamber of Commerce.

“It has substantially burdened the government’s legitimate law enforcement efforts; created a roadmap for the facilitation of criminal activity; and impeded programs to protect the national security of the United States and its allies,” Cabranes wrote.

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