Microsoft to the U.S.: You’re not the boss of our overseas servers

Yep. Microsoft and other cloud services are furious that U.S. surveillance is ruining their overseas business:

Microsoft’s fight against the US position that it may search its overseas servers with a valid US warrant is getting nasty.

Microsoft, which is fighting a US warrant that it hand over e-mail to the US from its Ireland servers, wants the Obama administration to ponder a scenario where the “shoe is on the other foot.”

“Imagine this scenario. Officers of the local Stadtpolizei investigating a suspected leak to the press descend on Deutsche Bank headquarters in Frankfurt, Germany,” Microsoft said. “They serve a warrant to seize a bundle of private letters that a New York Times reporter is storing in a safe deposit box at a Deutsche Bank USA branch in Manhattan. The bank complies by ordering the New York branch manager to open the reporter’s box with a master key, rummage through it, and fax the private letters to the Stadtpolizei.”

In a Monday legal filing with the 2nd US Circuit Court of Appeals, Microsoft added that the US government would be outraged.

“This case presents a digital version of the same scenario, but the shoe is on the other foot,” the Redmond, Washington-based company said in its opening brief in a closely watched appeal.

The appeal is of a July court decision demanding that Microsoft hand over e-mail stored on an overseas server as part of a US drug trafficking investigation. Microsoft, which often stores e-mail on servers closest to the account holder, said the e-mail is protected by “Irish and European privacy laws.”

But a US judge didn’t agree. “It is a question of control, not a question of the location of that information,” US District Judge Loretta Preska ruled. The order from the New York judge was stayed pending appeal.