The Department of Justice (DOJ) has issued a search warrant as part of a criminal drug investigation. While that may seem like a typical legal demand, the suspect lives in Ireland, and the email records that the DOJ seek are being stored at a data center in Ireland belonging to an Irish subsidiary of Microsoft.
The issue has gone to court, where a federal district court recently sided with the DOJ, but the case will likely move to appeal or even the Supreme Court. Now Congress is looking into the issue.
Aside from the many legal and legislative issues of the case, overlooked are the economic consequences that could have a devastating impact on U.S. tech firms operating abroad.
When the U.S. government tries to reach across a foreign boarder to seize the information of foreign citizens without approval of the foreign country, it is sidestepping existing cooperative agreements between the U.S. and the foreign country, and is violating these agreements and disregarding the basic sovereignty of that country.
These actions will likely lead to diplomatic tensions, and create distrust between countries. That, in turn, could lead to retaliation by foreign leaders, which will affect future cooperation between the countries with respect to trade, commerce and other matters. Moreover, the seizing of private information from foreign citizens could affect the willingness of foreign citizens, companies and countries to do business with U.S. high-tech companies. Not only would this circumvent existing agreements between the two countries, but it could also be putting U.S. companies that do business overseas in violation of the host country’s privacy and espionage laws.
If the U.S. feels that it has rights to private information of citizens living abroad, this opens the door for foreign countries to require their companies or their foreign affiliates that operate in the U.S. to turn over confidential data on American consumers and companies. Why would the DOJ want to open this can of worms?
At a minimum, consumers and businesses overseas will have concerns and misgivings about doing business with U.S. corporations. As a result, foreign consumers and businesses may react and shun U.S. company products and services. It could cause the host country to take steps to protect its citizens and companies, thereby keeping U.S. companies out of bidding for contracts and blocking the sale of U.S. products overseas. Concerns about spying on leaders and espionage of state secretes have been heightened by revelations of NSA’s PRISM spying scandal. The result could leave U.S. companies facing lost sales to consumers and small business, as well lost contracts with businesses and foreign governments.
Because U.S. companies are so well-positioned in the worldwide high-tech market, they also have a lot to lose from foreign retaliation. Foreign citizens would view the transfer of their information from U.S. high-tech companies to the U.S. government as an invasion of personal privacy. Similarly, foreign businesses and governments would see the transfer of private information to the U.S. government as a form of corporate and state espionage. At the very least, consumers and businesses would lose confidence in the ability of U.S. companies to protect their information.
The cost of a backlash could be devastating. By our recent analysis, the adverse consequences of turning these emails over to the DOJ could cost U.S. companies as much as $180 billion dollars and a loss of 200 million jobs. To put that in context, that would be like increasing the unemployment rate from 6.1% to 7.6%.
Two weeks ago, Sens. Orrin HatchOrrin Grant HatchLobbying world Congress, stop holding 'Dreamers' hostage Drug prices are declining amid inflation fears MORE (R-Utah), Chris CoonsChris Andrew CoonsBipartisan senators earmark billion to support democracies globally House passes bill to expedite financial disclosures from judges Overnight Energy & Environment — Presented by ExxonMobil — Dems seek to preserve climate provisions MORE (D-Del.) and Dean HellerDean Arthur HellerNevada becomes early Senate battleground Nevada governor Sisolak injured in car accident, released from hospital Democrats brace for tough election year in Nevada MORE (R-Nev.) introduced the bipartisan The Law Enforcement Access to Data Stored Abroad Act to fix the issue by limiting the reach of warrants to U.S. citizens and companies, as well as keeping conformity with foreign treaties. It is a starting point for a solution.
It is vitally important that Congress finds a resolution to this issue before the negative economic consequences of the DOJ’s actions cause irreparable harm to U.S. interests abroad. Congress needs a solution that makes the U.S. keep its promises and respect its legal treaties with other countries, and a solution that works to dispel any fears of privacy violations and spying that our allies might have.
Will Congress finish the job or just sit idly by?
Pociask is president of the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information, visit www.theamericanconsumer.org.