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Microsoft Wins Big in Cloud Privacy Protection Lawsuit

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Yesterday, a federal appeals court ruled in favor of Microsoft Corporation (MSFT - Free Report) saying that the U.S. government cannot put the squeeze on Microsoft and other companies to provide access to information stored on servers located outside the U.S.

The ruling came in relation to a narcotics case in Ireland, for which the U.S. Department of Justice (DoJ) sought access to e-mails stored on a server in Dublin, Ireland.

Disappointed by the court ruling, DoJ reportedly said that it’s contemplating its next move and may escalate the case to the U.S. Supreme Court.

Privacy Protection in Cloud

The decision comes at a time when cloud computing is still at a very nascent stage of development. It provides hope of privacy protection for the companies currently associated with the field.

As per media reports, Brad Smith, president and chief legal officer of Microsoft said that "It makes clear that the US government can no longer seek to use its search warrants on a unilateral basis to reach into other countries and obtain the emails that belong to people of other nationalities... It tells people they can indeed trust technology as they move their information to the cloud."

We note that currently under Microsoft CEO Satya Nadella’s leadership, the company is shifting its focus on cloud computing and its security. The favorable verdict is thus expected to boost the company’s cloud endeavors.

United We Stand!

Microsoft’s appeal was backed by some technology majors such as Amazon.com, Inc. (AMZN - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) among others. The vote of support also came from a UK-based digital rights campaigning organization, the Open Rights Group.

The Flip Side

Though cloud storage is a convenient way to store, access and encrypt data, instances of its misuse for criminal activity is a concern for law enforcement authorities.

Additionally, the Stored Communications Act of 1986, based on which the ruling was delivered, prohibited the reach of warrants that were applicable outside the U.S. According to some legal practitioners, the law is outdated in the present context and requires an update as technology has evolved over time.

Zacks Rank

At present, Microsoft has a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology space is Adobe Systems Inc. (ADBE - Free Report) , sporting a Zacks Rank #1 (Strong Buy).

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