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The Dangers Of DOJ Victory In High Court Microsoft

4.6.2018

This article was originally published by Law360 on March 1, 2018.

The technology industry is the proverbial goose that lays America’s golden eggs. American tech products boost export income, generate high-paying jobs, and create the kind of sustained growth and prosperity that make tech hubs like Silicon Valley, Austin, Texas, and the Research Triangle in North Carolina such desirable places to live.

The benefits are not merely domestic: American tech firms have dominated the world for decades. The list of American global tech titans is long and ever-growing — from early hardware juggernauts like IBM and HP to the personal computing giants Microsoft and Apple to contemporary data-centric behemoths such as Google, Facebook and Amazon.

American firms are largely unrivaled by international competitors, in some cases despite the efforts of foreign governments to “level” the playing field. But now the U.S. Department of Justice may clumsily, inadvertently and shortsightedly accomplish in a single piece of litigation what foreign governments and international competitors have been unable to do after years of effort: kill the goose that lays the golden eggs.

Just this week, the U.S. Supreme Court heard arguments in United States v. Microsoft. The case determines whether the DOJ can subpoena data stored on a Microsoft server located in the Republic of Ireland. The DOJ argues that it has a right to the data because it can be accessed from the United States, despite the fact that such direct access violates Irish and European Union law and U.S.-Ireland and U.S.-E.U. treaties.

Simply stated, the DOJ takes the position that if technology makes it easy to seize property stored in foreign jurisdictions — such as intangible data that can be transmitted over the internet — then the usual legal protections are likewise relaxed. In tech speak, the DOJ’s position is “highly innovative.”

Of course, unlike the American tech sector, our legal system is not generally known for its rapid innovation. Rather, the customary approach is incremental, with the courts reasoning by analogy and building gradually upon established precedent, especially in criminal law cases. The DOJ’s attempted innovation is contrary to well-established American legal precedents, which include presumptions against extraterritorial application of U.S. laws and a preference for construing U.S. laws so as to avoid conflicts with foreign legal regimes.

The DOJ’s position also conflicts with the laws and privacy principles of many of our European allies and trading partners. As a result of Europe’s experiences with 20th century totalitarianism, it places a far greater premium on privacy than we do in the United States. In the EU, data privacy is not merely an aspirational ideal — it is a fundamental value that is broadly and vigorously protected by law. The EU would almost certainly respond to a DOJ victory with blocking legislation. Such laws would set compliance traps for American tech companies processing European data.

For their part, European consumers, fearing that their personal data might be subject to unilateral seizure by American law enforcement, would seek alternatives to American tech providers. European companies, responding to this sentiment, and seeking to avoid being trapped between the competing demands of local and American law enforcement, would also veer to non-American vendors. This is not mere speculation: The American technology sector suffered similar losses in the wake of Edward Snowden’s revelations regarding National Security Agency surveillance programs.

Additionally, a victory for the DOJ would set a dangerous precedent by eroding international privacy norms. Foreign governments (and not only those of our friends and allies) would be emboldened to demand similar seizure rights with respect to Americans’ data. China and Brazil, among others, are already demanding data access rights like those the DOJ seeks. Those demands include U.S. citizen data residing in the United States but accessible abroad. Future efforts to resist sweeping demands by foreign governments, including authoritarian regimes, would be significantly undermined should the DOJ prevail.

Perhaps the most unfortunate aspect of the DOJ’s position is that the prospective train wreck is entirely unnecessary. The United States has legal assistance treaties with both Ireland and the European Union that entitles it to obtain the very data DOJ wants. The attorneys general of 33 U.S. states, the DOJ’s sole supporters before the Supreme Court — an unusually revealing and striking data point in itself — argue that these treaty channels are cumbersome.

But in an amicus brief filed on behalf of the German, French, Polish and Irish trade federations, we point out that this argument ignores notable successes of the treaty framework. For example, after the 2015 terrorist attacks in Paris, Microsoft turned over relevant records to U.S. law enforcement within 30 minutes of receiving the order. Likewise, treaty-based cooperation from Iceland enabled the FBI to dissect an elaborate technical labyrinth and shut down the Silk Road “dark net” marketplace and arrest its owner. Given its track record of success, the DOJ’s insistence on undermining the treaty framework is, at best, mystifying.

In sum, should the DOJ view prevail, it would hurt the American tech industry, infuriate America’s allies, and bolster authoritarian regimes, all in an effort to expedite a single investigation. Returning to our metaphor, it would kill, or at least maim, the goose that lays the golden eggs. To paraphrase a certain European statesman, that would be worse than a crime, it would be a blunder.

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