Microsoft wins against US government – for now

• Overseas data need not be handed to US government
• US government might appeal ruling to Supreme Court

 
 

MICROSOFT has won a case closely watched by the tech industry - the second round at least. A US court has found that that the company does not have to turn over the contents of an Outlook.com user’s inbox to American investigators because that user’s data is held abroad in Ireland.
 
The 2nd Circuit Court of Appeals overturned a lower court’s ruling that the Stored Communications Act, which permits domestically held data to be handed over to the government, does not apply to content held overseas.
 
In December 2013, as part of a drug investigation, the US authorities served Microsoft with a warrant. When the company refused to comply, a lower court held Microsoft in contempt. The 2nd Circuit has also vacated the contempt of court order.
 
The court found that the Congress did not intend the SCA’s warrant provisions to apply extraterritorially. The SCA warrant in this case may not lawfully be used to compel Microsoft to produce to the government the contents of a customer’s Email account stored exclusively in Ireland.
 
It is not clear what the US government hoped to attain from the Emails. They have also not revealed whether the Email account holder is American or if that person has been charged with a crime.
 
There is a possibility that the US government will appeal and if that happens, the case will go to the US Supreme Court. If the US government wins the appeal, it is difficult to see how Microsoft can legally hand over the data without violating last year's European Union Safe Harbour ruling. Essentially, the software giant would be caught between the devil and the deep blue sea.
 
Here is a brief video on the Safe Harbour ruling and its impact.
 

For the past 15 years, more than 5,000 companies relied on Safe Harbour as a means to sanction moving information into the US from Europe. EU's decision to invalidate that option is now creating problems for thousands of businesses, as they need to find new ways to transfer data across the Atlantic without violating EU's privacy laws.
 
Whilst these rulings immediately affect US companies doing business in EU countries, businesses in other parts of the world cannot avoid its impact. Countries may either follow suit or retaliate. It will also likely impact the financial performance of companies as they will need to build new local data centers to store information locally.
 
So, at least for the time being, Microsoft and the US tech industry can celebrate their victory. But this story is far from over.
 
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