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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. The Supreme Court

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Speaker 1: heard oral arguments today in a high stakes clash over

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Speaker 1: digital privacy. Microsoft faced off against the Trump administration over

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Speaker 1: giving the government access to information stored on the tech

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Speaker 1: giant servers in Ireland. It revolves around a search warrant

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Speaker 1: the government served on Microsoft five years ago for emails

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Speaker 1: it says would show evidence of drug trafficking. Microsoft refused

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Speaker 1: to turn them over. Joining me from our San Francisco

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Speaker 1: studio is Matt Larson, Bloomberg Government Technology litigation analysts. Matt,

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Speaker 1: the government served Microsoft, a US company, with a subpoena

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Speaker 1: for the emails of someone suspected of drug trafficking. Emails

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Speaker 1: it could exists in the US. Why didn't Microsoft turn

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Speaker 1: them over? Yeah? So Microsoft here is looking at a

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Speaker 1: global industry cloud computing. UM, people you know, living in

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Speaker 1: the US, living in any country can technically store data

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Speaker 1: on servers abroad. That's how we have cloud access and

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Speaker 1: how you can get data from a bunch of different

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Speaker 1: points all over the globe. And so from Microsoft, this

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Speaker 1: is a huge, a huge business concern, particularly in the

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Speaker 1: post snow Don era where a lot of a lot

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Speaker 1: of countries are um wary of what access other countries

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Speaker 1: have to their data. So from Microsoft, they're looking at

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Speaker 1: this saying, if we have data that stored abroad in Ireland,

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Speaker 1: it's not necessarily good for business to allow any government,

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Speaker 1: including the US, to to bypass existing laws and entreaties

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Speaker 1: by which countries can coordinate to provide information. It's not

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Speaker 1: it's not good for business to allow them to bypass

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Speaker 1: that and grab data that lives in another country. What

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Speaker 1: was the government's argument. The government's arguments is, you know,

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Speaker 1: kind of take the other side, looking at it from

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Speaker 1: a law enforcement perspective, looking at it from an efficiency

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Speaker 1: perspective when trying to get information. Microsoft is a US company,

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Speaker 1: The government argues, the distinction is a little bit artificial.

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Speaker 1: Just because they decided to send data abroad, you can

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Speaker 1: still instruct the US company to UH to engage in,

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Speaker 1: you know, min early UH burden some activity to pull

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Speaker 1: that information. That's a little bit more complicated than just

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Speaker 1: a couple of clicks of a button. But because Microsoft

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Speaker 1: resides in Washington in the US, UH, they should be

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Speaker 1: able to pull that information. So that's kind of what

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Speaker 1: the government is looking at. It's easier just to go

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Speaker 1: to the company, have them pull it directly and provide

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Speaker 1: that UH in response to a warrant or subpoena. At

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Speaker 1: the r arguments, Chief Justice John Roberts said it's not

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Speaker 1: the government's fault. It's stored overseas, and many observers who

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Speaker 1: were there said the Supreme Court seemed likely to rule

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Speaker 1: against Microsoft. How would are ruling against Microsoft affect the

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Speaker 1: tech world? Yeah, I think all all tech companies are

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Speaker 1: are a little on edge. After oral arguments today, everybody

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Speaker 1: kind of agrees that Congress needs to to step in here.

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Speaker 1: But you know, looking at it, there is if you're

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Speaker 1: a US provider and now there's case law that the U.

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Speaker 1: S courts can um can get records from data that's

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Speaker 1: stored abroad, that's bad for business in Europe. UM. You know,

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Speaker 1: if you're a European customer, you might be looking for

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Speaker 1: for other europe European based or or even localized data

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Speaker 1: hosting centers because you know that that information isn't subject

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Speaker 1: to warrants in the US, So for the U S

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Speaker 1: companies it's bad. There could also be some repercussions if

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Speaker 1: the US can can do this, you may see data

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Speaker 1: residency requirements in Europe. They had tossed those around a

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Speaker 1: couple of years ago whether data about citizens needs to

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Speaker 1: actually be held in the country and not accessible by

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Speaker 1: other countries. So it kind of unleashes this whole can

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Speaker 1: of worms if it goes against Microsoft, and if Congress

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Speaker 1: doesn't kind of act quickly to update the law. Well,

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Speaker 1: several of the justices did express frustration with a applying

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Speaker 1: the Stored Communications Act, which was to this era of

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Speaker 1: cloud computing, and said they would prefer that Congress act

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Speaker 1: on appending by partisan proposal to update the law. So

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Speaker 1: where does that proposal stand and what is it that's

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Speaker 1: exactly right? You know, in terms of where it stands now,

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Speaker 1: I've I've forgotten that the nitty gritty of it. I

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Speaker 1: know that Oren Hatch was in was in the courtroom

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Speaker 1: today kind of listening to arguments that it's been. You know,

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Speaker 1: there's a lot of lobbying money going into this. I'm

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Speaker 1: not sure, um, where it stands in in the committee. Um,

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Speaker 1: but yeah, this certainly needs to be updated by Congress.

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Speaker 1: You know, the law was written when people were still

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Speaker 1: conceptualizing computers. Is essentially just an electronic storage or file cabinet, right, Um,

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Speaker 1: there wasn't the issue of just being able on a

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Speaker 1: mass level to access things that are stored remotely. And

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Speaker 1: so we're kind of shoehorning a law that doesn't fit

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Speaker 1: with the realities of today to a situation that's very

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Speaker 1: much involved with with the realities created cloud computing. And

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Speaker 1: so it's in everybody's best interest for Congress to come

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Speaker 1: up with with a solution. But you know, we're looking

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Speaker 1: at um a somewhat slow process. I think by the

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Speaker 1: time you actually, you know, get an update, there seems

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Speaker 1: to be partisan support. Everybody agrees that it needs to

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Speaker 1: get done, just kind of needs a final push to

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Speaker 1: get over the finish line. So, you know, maybe maybe

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Speaker 1: sometime later this year, maybe maybe next year. Tech companies

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Speaker 1: certainly hope sooner than later. In the meantime, is it

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Speaker 1: that much of a detriment for Microsoft if it has

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Speaker 1: to turn over some emails? I don't know how many

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Speaker 1: search warrants it served with, but it doesn't seem like

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Speaker 1: a like a burden in this isolated incident. I would

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Speaker 1: say it's not a huge burden. It's the policy for Microsoft.

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Speaker 1: This is largely a symbolic fight, and it creates a

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Speaker 1: precedent down the road, and so you know, you're you're

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Speaker 1: looking kind of the snowball effect is you don't want

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Speaker 1: to UM to you know, the one case involving a

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Speaker 1: drug trafficker probably not a huge deal. But then when

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Speaker 1: you get into multiple different warrants, when you have UH

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Speaker 1: companies abroad kind of looking at the legal precedent that's

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Speaker 1: created in the US when making determinations as to where

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Speaker 1: they're going to house their data, UM kind of one

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Speaker 1: investments are going to be made abroad. That's when Microsoft

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Speaker 1: really starts to to worry about the precedential impact of

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Speaker 1: this decision. About forty five seconds here, Matt, is this

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Speaker 1: akin to Apple stance over an iPhone unlocking an iPhone?

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Speaker 1: It has a little bit of a similar flavor. I

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Speaker 1: think that the the Apple iPhone issue UM raises some

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Speaker 1: similar privacy concerns, but I would distinguish the two and

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Speaker 1: that the Microsoft case is a little bit more about

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Speaker 1: investment in UH, in data centers and in cloud security generally.

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Speaker 1: So it's it's maybe more of a security issue than

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Speaker 1: a privacy issue. So for Apple, they want to be

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Speaker 1: sure that everybody knows when you've got an iPhone, your

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Speaker 1: data is secure. UH. And it's going to be difficult

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Speaker 1: to pull it out of there from Microsoft or looking

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Speaker 1: to invest UH substantial, substantial figures, you know, in the

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Speaker 1: in the tens. We're approaching hundreds of billions between some

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Speaker 1: of the big three cloud computing companies in Europe over

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Speaker 1: the next or globally over the next couple of years.

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Speaker 1: And so we actually leave it there, but we'll pick

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Speaker 1: it up at least in June when the court comes

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Speaker 1: down with the decision. That's Matt Lawson, Bloomberg Government Technology

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Speaker 1: litigation analyst from our San Francisco bureau. Thanks for listening

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Speaker 1: to the Bloomberg Law Podcast. You can subscribe and listen

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Speaker 1: to the show on Apple Podcasts, SoundCloud and on Bloomberg

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Speaker 1: dot com slash podcast. I'm June Grasso. This is Bloomberg