Dive Brief:

• The U.S. Department of Justice requested the Supreme Court dismiss the U.S. v. Microsoft case as moot in light of the passage of the Clarifying Lawful Overseas Use of Data Act (CLOUD Act), according to motion by Solicitor General Noel J. Francisco.

• The CLOUD Act was passed in the federal government spending bill in late March and clarifies the disclosure of data stored abroad by electronic communications providers and access to cross-border data transfers with foreign governments.

• Under the act, a provider can contest disclosure on the grounds that the customer or subscriber in question is not a U.S. person or resident or that disclosure would violate the laws of a foreign government.

Dive Insight:

The Microsoft case was heard by the Supreme Court in February, with both sides at least agreeing that (at the time) the Stored Communications Act was woefully outdated for modern digital communications.

The CLOUD Act has seen considerable support across party lines and among the tech community.

Following the hearing, Microsoft's President and Chief Legal Officer Brad Smith said the act is an important step for privacy and human rights in the intersection of law enforcement and data transfer. The legislation also provides new rights for companies to protect the privacy of customers and subscribers, he said.

The passage of the CLOUD Act "is ultimately a complete answer to the outcome of the Microsoft case," codifying the government's position, said Joshua Rich, partner with McDonnell Boehnen Hulbert & Berghoff LLP and chair of the firm's Trade Secrets Practice Group, in an interview with CIO Dive.

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"A provider of electronic communication service or remote computing service shall comply with the obligations of this chapter to preserve, backup, or disclose the contents of a wire or electronic communication and any record or other information ... regardless of whether such communication, record, or other information is located within or outside of the United States."

The Cloud Act amendment to the Stored Communications Act

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The Supreme Court does have the option of ruling a case based on merit even if it is moot. While it appears that Microsoft would still like a decision in the case, "providence suggests that they recognize that the follow-on subpoena is sufficient to at least diminish the importance of the case so substantially that ... [the justices] don't need to go out on a limb and answer the questions that were raised in the Microsoft case," said Rich.

In the short term, there is no change to how a foreign government would get data from the U.S., but it does provide for bilateral agreements for reciprocal data provision to foreign governments, according to Rich. Such agreements fall in line with President Trump's desire for more bilateral and less multilateral agreements.

There may be some backlash in the international arena, however. Communications that take place outside of the U.S., if relevant to an investigation, could be subject to disclosure, which may anger citizens on foreign countries with stricter privacy laws. This backlash could translate to users turning away from U.S. email providers, according to Rich.