US says global reach needed to gut "fraudsters," "hackers," and "drug dealers."

Global governments, the tech sector, and scholars are closely following a legal flap in which the US Justice Department claims that Microsoft must hand over e-mail stored in Dublin, Ireland.

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. "Congress has not authorized the issuance of warrants that reach outside US territory,” Microsoft’s attorneys wrote. “The government cannot seek and a court cannot issue a warrant allowing federal agents to break down the doors of Microsoft’s Dublin facility."

The Redmond, Washington-based company said its consumer trust is low in the wake of the Edward Snowden revelations. It told the US judge presiding over the case that "[t]he government's position in this case further erodes that trust and will ultimately erode the leadership of US technologies in the global market."

Companies like Apple, AT&T, Cisco, and Verizon agree. Verizon said (PDF) that a decision favoring the US would produce "dramatic conflict with foreign data protection laws." Apple and Cisco said (PDF) that the tech sector is put "at risk" of being sanctioned by foreign governments and that the US should seek cooperation with foreign nations via treaties, a position the US said is not practical.

The Justice Department said global jurisdiction is necessary in an age when "electronic communications are used extensively by criminals of all types in the United States and abroad, from fraudsters to hackers to drug dealers, in furtherance of violations of US law."

The e-mail the US authorities are seeking from Microsoft concerns a drug-trafficking investigation. Microsoft often stores e-mail on servers closest to the account holder.

The senior counsel for the Irish Supreme Court wrote in a recent filing that a US-Ireland "Mutual Legal Assistance Treaty" was the "efficient" avenue (PDF) for the US government to obtain the e-mail held on Microsoft's external servers.

Orin Kerr, a Fourth Amendment expert at George Washington University, said, "The scope of the privacy laws around the world is now a very important question, and this is the beginning of what may be a lot of litigation on the question. So it's a big case to watch."