“In both the United States and Europe, we need new laws adapted to a new technological world.”
More than anything else, Smith believes the collapse of the Safe Harbor reflects the “remarkable evolution of privacy issues.”
But with the onus now on the US to make the next move in negotiating a replacement for the now defunct Safe Harbor Agreement, the need for clarity has never been greater.
Business impact?
Back to the matter at hand however, and unbeknown to many across the industry, the Microsoft Ireland case strikes at one of the fundamental questions about technology today: How can we strike a balance between digital privacy and public safety?
On the impact to US businesses in particular, both Apple and Cisco argue that “neither the broad economic interests nor the political interests of the United States will be served if foreign citizens believe that they are better off not doing business with U.S. based companies.”
Delving deeper, Cupertino believes “by excluding considerations related to the laws of the country where data is stored and to which the data controller would be subject, the District Court’s analysis places providers and their employees at risk of foreign sanctions with no clear answers on resolving the inevitable conflicts between United States and foreign law.”
Such sentiment is echoed by Verizon, which states that “the magistrate’s ruling, if left standing, could cost U.S. business billions of dollars in lost revenue, undermine international agreements and understandings, and prompt foreign governments to retaliate by forcing foreign affiliates of American companies to turn over the content of customer data stored in the United States.”
In short, this provides a reason for non-US companies to basically say “don’t use US company cloud services because that means the US Department of Justice will have access to everything. Use ours instead.”
So much so that a government victory is almost certain to further erode willingness on the part of foreign companies to trust American business with their data, in a move which many believe will “break the cloud computing ecosphere.”
The knock-on effect would be that tech titans such as Apple, Amazon, Google or any other company continuing to offer internet based email or cloud network services, would now forced to create a subsidiary in each country they operate - each which has a slightly different set of privacy and data protections.
“In a nutshell, this case is about how we best protect privacy, ensure that governments keep people safe, and respect national sovereignty while preserving the global nature of the internet,” Smith states.
“While there are many areas where we disagree with the government, we both agree that outdated electronic privacy laws need to be modernised.
“The statute in this case, the Electronics Communications Privacy Act, is almost 30 years old. That’s an eternity in the era of information technology.”
Enacted by the United States Congress in 1986 to extend government restrictions on wire taps from telephone calls to include transmissions of electronic data by computer, the entire technology community is united in its belief that the act is in desperate need of a refresh.
“In the U.S. we believe there is an important debate to be held about the best way to reform the law and our international relationships, and there are critical policy considerations on both sides,” Smith adds.
“Law enforcement needs to be able to do its job, but it needs to do it in a way that respects fundamental rights, including the personal privacy of people around the world and the sovereignty of other nations.
“We hope the U.S. government will work with Congress and with other governments to reform the laws, rather than simply seek to reinterpret them, which risks happening in this case.”
As Microsoft urges Congress and the White House to seize the opportunity to update the law and advance international solutions, the world watches on intently as Redmond’s fight for change enters a crucial phase.
Should Microsoft lose, the technology industry is under no illusions that it too will go down with the verdict.