Digital privacy

German business associations speak out against US data demands

data, microsoft, us
Many Germans want to keep their data private. Source: Reuters

What began as a dispute over a search warrant issued by US prosecutors in 2013 has since become a Supreme Court case of global interest. United States v. Microsoft Corp. centers on the question of whether American investigators can demand customer data that is stored overseas.

How the nine American justices ultimately rule on that issue in 2018 has European business associations worried, considering what they believe is at stake: the future of trans-Atlantic ties, EU privacy rules and the open internet. Germany’s top two industry groups are now planning to make those concerns known in Washington.

Handelsblatt has learned that the Federation of German Industries, known as the BDI, and the Association of German Chambers of Commerce and Industry (DIHK) plan to file an amicus brief with the Supreme Court in support of Microsoft. The letter has also been signed by the French business federation MEDEF as well as Polish Confederation Lewiatan, the country’s leading business association. An amicus brief is a document filed by parties not involved in a case but who seek to provide supporting material to the court. 

Repercussions of a Justice Department victory in this case would extend far beyond the American technology industry: Virtually every cross-border data transfer would be impacted. 

The Supreme Court, which is set to argue the case Feb. 27, 2018, will have to decide whether the US government can use simple search warrants to compel American companies to hand over data stored outside the US, regardless of whether the data pertains to an American or foreign national. The US Justice Department’s de facto pursuit of global access to any personal information on the servers of American internet companies puts it at odds with other countries’ data protection rules.

Data privacy is a large concern in Germany and elsewhere in Europe, where the right to be forgotten is encoded into internet regulations. Many Germans are watchful over their personal details and are less likely than Americans to trade information for convenience.

The dispute at hand dates back to 2013, when US federal prosecutors issued a search warrant for emails stored on Microsoft’s servers as part of a drug trafficking investigation. Microsoft challenged the request, because the data in question was located on a server in Ireland. Most recently, a US Court of Appeals ruled in Microsoft’s favor, overturning previous decisions that the upheld the warrant.

For Microsoft, the dilemma is whether to violate Irish and European privacy rules or to refuse to comply with a US judicial order. For German industry representatives, that first concern is paramount. “The fact that Microsoft is an American company changes nothing about the fact that the data is on a server in the EU and that here Microsoft must adhere to European law,” said Iris Plöger, a member of BDI’s executive board, who heads its digital department.

“The fact that Microsoft is an American company changes nothing about the fact that the data is on a server in the EU and that here Microsoft must adhere to European law.”

Iris Plöger, a member of BDI’s executive board

Germany’s former data protection commissioner, Peter Schaar, has also taken Microsoft’s side, and the European Commission has already told the US Supreme Court that its decision would have global consequences. Germany’s federal government has yet to state its position despite the gravity of the case and popular support for tough data privacy rules, possibly because it wants to avoid further straining its already tense relationship with President Donald Trump.

With the government keeping quiet for now, German trade groups are taking the matter into their own hands. “If US authorities are granted access, business relationships with US service providers worldwide would face the strain of significant uncertainties,” Ms. Plöger said.

In the Justice Department’s pursuit of data, critics see shades of 2013’s National Security Agency spying scandal. They worry that a ruling against Microsoft could lead to a form of data protectionism and even digital economic warfare: Countries could cut themselves off from the open internet in order to protect their data from US authorities, splintering a global network into national ones.

In the amicus brief, the European trade groups argued that a ruling in favor of the US government could disrupt global business by encouraging companies to localize their data. “The Justice Department will lose existing means of accessing data,” the draft document stated. “American technology companies will lose business to overseas competitors. European industry will lose the benefits of a seamless global economy. Users will be denied choice in providers and optimal data security.”

It isn’t unusual for interested parties not directly involved in litigation to file amicus briefs with US courts. Germany’s top industry association BDI has done so in the past, but this time the stakes are higher. “Extra-territorial and conflicting legal norms are not new in international business transactions,” Ms. Plöger told Handelsblatt. “But with digitization, the potential for conflict has increased, since data flows and access options are no longer bound by national borders.”

The United Nation’s special rapporteur on the right to privacy, Joseph Cannataci, also filed an amicus brief, in which he wrote, “This case raises hard questions about whose privacy laws should govern a law enforcement agency’s access to private data stored “in the cloud” with a third-party provider.”

The US Justice Department has argued that it requires wide-ranging access to data in order to keep up with technological innovations and the rise of cloud computing. Washington has stood firm on the search warrant issue, despite the fact that it has other ways of trying to obtain the information, such as making an official request to a foreign court for assistance.

Moritz Koch is a political correspondent for Handelsblatt based in Berlin. To contact the author: 

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