Tech Companies Applaud Measure to Clarify US Access to Data

Greg Stohr and Ben Brody (Bloomberg) -- A measure tucked into the massive spending bill passed by the House Thursday lays out new rules for international data requests by law enforcement, giving tech companies an easier way to navigate conflicts between government demands and customer privacy expectations.

Microsoft Corp. and trade groups representing companies such as Google and Apple Inc. applauded inclusion of the provision in the $1.3 trillion spending bill that is headed toward a final vote in the Senate. Passage may end a Supreme Court case that had pitted Microsoft against the Justice Department in a fight over emails stored on a server in Ireland.

The Clarifying Lawful Overseas Use of Data Act, or CLOUD Act, which was tacked on at the end of the 2,232-page spending bill, makes clear that U.S. warrants apply around the world and clarifies what data the government can access. It sets up a new process for providers to challenge U.S. warrants and notify foreign governments so they can object.

The measure also puts in place new rules for American companies when they receive information requests from foreign governments. The U.S. would be able to make agreements with other nations governing access. It would supersede the 1986 law at the heart of the Supreme Court case.

“Today is an important day for privacy rights around the world, for international relations and for building trust in the technology we all rely on every day,” Microsoft President Brad Smith said in a statement Wednesday.

But the American Civil Liberties Union and privacy groups opposed the CLOUD Act, arguing it would undermine privacy and human rights around the world. Democratic Senator Ron Wyden of Oregon said it “contains only toothless provisions on human rights" and represented “legislative malpractice.”

The Department of Justice has supported a prior version of the CLOUD Act, and industry trade groups including BSA - The Software Alliance, the Consumer Technology Association and the Information Technology Industry Council applauded its moves toward becoming law.

The Supreme Court case, which was set for a decision by June, stemmed from the government’s use of the 1986 law to seek emails from an unidentified account kept on Microsoft’s server in Ireland. The Justice Department says the messages would provide evidence of drug trafficking.

During arguments in February, some justices suggested they would prefer letting Congress address the issue rather than resolving it based on a statute that predates the World Wide Web.

“If Congress takes a look at this, realizing that much time and innovation has occurred since 1986, it can write a statute that takes account of various interests,” Justice Ruth Bader Ginsburg said. “And it isn’t just all or nothing.”

As a formal matter, the new law might not make the dispute legally moot, but it would give the justices even more incentive to sidestep the issue, said Stephen Vladeck, a professor at the University of Texas School of Law.

"I think the justices would be in a big hurry to kick the case back to the lower courts to consider what effect, if any, the CLOUD Act has on the underlying dispute," Vladeck said.