In essence, President Barack Obama's administration claims that any company with operations in the United States must comply with valid warrants for data, even if the content is stored overseas. It's a position Microsoft and companies like Apple say is wrong, arguing that the enforcement of US law stops at the border.
A magistrate judge has already sided with the government's position, ruling in April that "the basic principle that an entity lawfully obligated to produce information must do so regardless of the location of that information." Microsoft appealed to a federal judge, and the case is set to be heard on July 31.
In its briefs filed last week, the US government said that content stored online doesn't enjoy the same type of Fourth Amendment protections as data stored in the physical world. The government cited (PDF) the Stored Communications Act (SCA), a President Ronald Reagan-era regulation:
Overseas records must be disclosed domestically when a valid subpoena, order, or warrant compels their production. The disclosure of records under such circumstances has never been considered tantamount to a physical search under Fourth Amendment principles, and Microsoft is mistaken to argue that the SCA provides for an overseas search here. As there is no overseas search or seizure, Microsoft’s reliance on principles of extra-territoriality and comity falls wide of the mark.Microsoft said the decision has wide-ranging, global implications