Warrants in the Clouds: How Extraterritorial Application of the Stored Communications Act Threatens the United States Cloud Storage Industry

The advancement of technology and the global shift towards cloud data storage has created major rifts throughout the legal landscape. Cloud technology has changed the way data is stored by breaking down borders and expanding jurisdictional reach. Unfortunately, congressional legislation has failed to keep pace with the rapid changes and extraterritorial nature of the tech industry. The current piece of congressional legislation that oversees data privacy protection within the United States is the Stored Communications Act (SCA), which was enacted as part of the broader Electronic Communications Privacy Act (ECPA) of 1986. However, the SCA is now almost three decades old, and its vague application to present cloud technology and worldwide technological expansion has exposed U.S. technology companies, which utilize global cloud networks, to compliance difficulties from judicial and legislative uncertainty. A recent dispute between Microsoft and the United States Government highlighted the disparity between the globalization of data storage, international privacy rights, and current congressional legislation. In what is described as a potentially “landmark case,” the United States District Court of the Southern District of New York (the district court) upheld warrant under the SCA requiring Microsoft to disclose personal data, in particular private e-mails of a Microsoft e-mail user, stored on Microsoft servers in Dublin, Ireland. The search warrant relates to an ongoing narcotics investigation in the United States. The warrant was originally issued by a magistrate judge, who “held that [the] warrant did not violate [the] presumption against extraterritorial application of the law of the United States,” and was affirmed by a U.S. District Court Judge on appeal. Ultimately, the unclear application of the dated and vague SCA leads to impractical compliance problems for U.S. Technology Companies, thereby threatening their economic growth. As long as U.S. legislation lags behind, U.S. Technology Companies are at risk to losing business with international customers and nations, potentially amounting to lost profits in the billions of dollars. In addition, the extraterritorial application of the SCA places pressure on international relations, particularly between the United States and the European Union (the E.U.), over data protection law, which only further constrains the U.S. technology and cloud data industry. Microsoft’s ongoing legal battle with the U.S. government highlights what is likely to be a recurrent debate over the expanding jurisdictional reach of the United States with electronic information now commonly stored abroad. Instead of forcing the courts to interpret congressional legislation, this issue demands legislators to re-think lagging statutes that relate to electronic information and to take a more pro-active approach so that legislation more accurately reflects advances in technology. This Note recommends certain amendments to the SCA to improve its relevancy to modern technology, based on the newly introduced Senate bill entitled the Law Enforcement Access to Data Stored Abroad Act (the LEADS Act).