A federal court ruling on the government’s access to data stored offshore by U.S.-based companies could have far-reaching impacts on the cloud market.
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A federal district judge in New York ruled this week that Microsoft had to turn over a customer’s emails stored in Ireland in response to a warrant issued earlier this year. Microsoft argued that it’s unlawful for prosecutors to seize customer data held outside the U.S., but Judge Loretta Preska told the company that the location of its data was immaterial.
“It is a question of control, not a question of the location of that information,” Preska said, according to Reuters.
It’s unclear how this could damage the U.S. cloud computing industry, as email has been one of the most popular tools in the cloud. Over the next 12 months, 38% of enterprises plan to deploy the service in the public cloud, second only to test and development, according to the TechTarget Cloud Infrastructure Research Survey Q2 2014.
The ruling comes as Microsoft tries to make inroads in Europe with its Azure cloud and chip away at Amazon’s lead in the market. It also follows last year’s revelations about the U.S. National Security Agency’s secretive data collection around the world that the nonprofit Information Technology and Innovation Foundation estimated at the time could cost the U.S. cloud computing industry $22 billion to $35 billion over the next three years. Other analysts have put the figure even higher.
Security and data control of environment in the cloud are major hurdles for enterprises, with more than a third of IT pros citing those two issues as obstacles to adopting cloud computing, according to the TechTarget survey.
Providers have been building or purchasing datacenters around the world, in part to help localize data in countries in Europe and elsewhere with stricter storage regulations, but this could open the door for European-based and other localized cloud providers to gain traction in a market dominated by U.S.-based vendors.
The judge’s order has been temporarily suspended, as Microsoft intends to challenge the decision in 2nd U.S. Circuit Court of Appeals in what is believed to be the first case in which a corporation challenged a warrant for data held in other nations. AT&T, Apple Inc., Cisco Systems Inc. and Verizon Communications Inc. all submitted briefs in support of Microsoft’s appeal.
The judge’s decision centered on a sealed investigation that involved a warrant a New York prosecutor served for a Microsoft customer’s emails stored in Dublin, Ireland.