The government argued that barring access would create a legal loophole that would allow fraudsters, hackers, and drug traffickers to operate without the fear of prosecution. Microsoft countered by saying ruling for the government could open the doors for other foreign courts to demand access to servers on American soil.
A federal district court had ruled in the government’s favor in 2014, but Microsoft won on appeal in the Thursday decision. The appeals court ruled that U.S. law does not allow for courts to order the seizure of data that is stored exclusively on foreign servers.
Legal experts watched the case closely as the ruling could answer questions surrounding the privacy of data stored outside of the country. The Electronic Communications Privacy Act of 1986 was written three years before the web even existed, and at that point there was no consideration given to how the courts should act when the digital information needed in a case only exists overseas.
There is a process by which governments can request evidence from foreign countries, however it is often time consuming. There also might be stricter controls on user privacy in the country where that server is located, making data seizure all but impossible through this route.
American cloud providers also worried that any negative ruling might also deter foreign companies from using their services, given that a favorable ruling for the U.S. government might open their data up to inspection in a similar type of event.
Neither the Justice Department nor Microsoft had any immediate comment on the ruling.
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