Lawyers for Microsoft say they will appeal a federal judge's order that they turn over the contents of a customer's email that's stored on a server in Ireland. But if Microsoft were to comply with the order, it appears that the company would be in violation of both Irish and European laws.
"It's the business that gets squeezed. Microsoft faces the wrath of the U.S. and the European courts," said Heather Egan Sussman, a privacy law expert with the law firm of McDermott Will and Emery. "It's a tough pickle to be in."
What's worse is that the warrant that was served on Microsoft is on shaky constitutional grounds, simply because under normal circumstances a warrant can only be used for evidence that's located inside the United States. Currently, the federal prosecutor is depending on a novel concept of a "hybrid" warrant that also has aspects of being a subpoena, which can demand evidence from overseas.
The warrant was granted by a federal magistrate and when Microsoft objected, saying it violates the Constitution as well as the law where the data is located, the U.S. District Court for the Southern District of New York agreed to hear the case. On July 31 federal Judge Loretta Preska agreed with the government's position, but also agreed to stay her order so that Microsoft can appeal to the decision to the U.S. Circuit Court of Appeals.
Microsoft has said it won't waste any time in filing an appeal. "The only issue that was certain this morning was that the District Court's decision would not represent the final step in this process. We will appeal promptly and continue to advocate that people's email deserves strong privacy protection in the U.S. and around the world," said Brad Smith, Microsoft's general counsel and executive vice president, Legal and Corporate Affairs, in a prepared statement released shortly after the hearing.
As you might expect, the Europeans are watching the development very carefully. The Irish government is concerned that the U.S. government is reaching into its territory. Meanwhile, Microsoft's competitors are relishing the issue, knowing that it puts the company at a huge competitive disadvantage. European companies can, after all, use this situation as a reason why customers should avoid worldwide Microsoft email and cloud services.
The Irish government confirmed that it is closely watching these legal developments. "The Irish Government is aware of the case in question and is monitoring developments," Ralph Victory, Press and Information Counsellor for the Embassy of Ireland in Washington, told eWEEK in an email.