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July 14, 2016

Next Stop for Your Data: Ireland

Muddy Situation only Likely to Get Muddier

That big sucking sound is your data going overseas. That’s the clear implication of a federal court’s ruling this week that the federal government cannot enforce search warrants for data held overseas. In a first, Microsoft sued two years ago challenging the authority of federal prosecutors to compel the company to turn over a customer’s email stored in a data center in Ireland.

There are numerous fault lines and third-rails here. First, ever since the Edward Snowden controversy, American tech companies have been scared to death that overseas markets would freeze them out over fears that foreigners’ data would be grabbed by U.S. authorities. And the FBI-Apple encryption fight exposed the awkward relationship between U.S. authorities that want tech companies help and American companies’ jitters over being seen as too cozy with Big Brother.

Now, here comes the 2nd Circuit Federal Appeals Court to the rescue. In short, the 2nd Circuit ruled that the Stored Communications Act was not intended to apply outside the United States and that a user’s privacy interests trumped a search warrant.

What will this mean?  Not only does it mean that foreigners will want their data to be stored outside the United States, but U.S. citizens who want their privacy protected will want their data overseas as well. This decision further complicates the already tricky job that federal prosecutors face in tracking down terrorists or combatting crime. In other words, it’s a muddy situation only likely to get muddier.

It’s a near certainty that the 2nd Circuit decision will be appealed, either to the full appeals court or ultimately the Supreme Court, which will have to make a final decision.

For U.S. tech companies grappling with how to cooperate with federal authorities but maintain their customer’s privacy, it’s a respite. But it’s nowhere near the end of this discussion. While we wait for the Supreme Court to weigh in, Congress ultimately must rethink the laws to reflect 21st century technologies and needs. Of course, it feels like I write that about every issue that pops up – and in the current toxic political environment Congress can’t even agree on naming a courthouse let alone defining the laws that will define what privacy looks like.

But until the Supreme Court and Congress weigh in, there will be ongoing skirmishes between privacy advocates and the government – with nervous U.S. tech companies trying to navigate the middle ground between them.

That’s why we need modern laws – fences make good neighbors

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