US companies that host services over the Internet and sell remote data storage, a concept broadly known as "cloud computing", say they stand to lose billions of dollars in business if emails and other files they house overseas are seen vulnerable to US snooping.
Lawyers for the companies say the perception was stoked by former NSA systems analyst Edward Snowden's revelations last year that the US and other countries' intelligence agencies routinely and indiscriminately gather and store huge amounts of data from phone calls and Internet communications.
And it was harmed again in April, they say, when a Manhattan magistrate judge concluded it was legal for the government to order Microsoft to comply with a sealed search warrant for a consumer email account it stores in Dublin, Ireland.
A Microsoft vice president wrote in a court document that the company offers its cloud services in more than 100 countries and tries to keep a customer's data, including email, calendar entries and documents, in a data center near where the customer is located for easy and cost-effective access. Microsoft maintains data centers worldwide, including in the United States, Ireland, the Netherlands, Japan and Brazil.
The mammoth software company said in court papers this month that the ruling threatens to rewrite the Constitution's protections against illegal search and seizure, damage US foreign relations and "reduce the privacy protection of everyone on the planet."
"Over the course of the past year, Microsoft and other U.S. technology companies have faced growing mistrust and concern about their ability to protect the privacy of personal information located outside the United States," Microsoft said. "The government's position in this case further erodes that trust, and will ultimately erode the leadership of US technology companies in the global market."
Two phone carriers, Verizon Communications Inc and AT&T Inc, have joined the fight, along with Apple Inc and Cisco Systems Inc, submitting arguments in support of Microsoft in recent days to a district judge prior to a late-July hearing.