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Microsoft warns that the PATRIOT Act, recent renewed by President Obama, will allow the U.S. to invade EU citizens' private data without notification.  (Source: Paramount Pictures)

The revelation could lead the EU to forcing Facebook, Google, Microsoft, and others to adopt isolated hosting in Europe for European services. Currently much of the hosting for European users is handled in America, exposing their data to invasive U.S. laws.  (Source: Flickr/TJCrowley)

Senators John McCain (R-Ariz.) and John Kerry (D-Mass.) have proposed a privacy bill that may help fix the awkward standoff.  (Source: AP Photo)
Microsoft tipped off the EU about possible data grab

The European Union (EU) is a little bit upset with the United States federal government after it caught wind of a possible plan to swipe EU citizens' private data from cloud service providers, in violation of EU laws.  And the U.S. government can blame software giant Microsoft Corp. (MSFT) for letting the secret out of the bag.

I. PATRIOT Act: Policing the World

People often get caught up in possible domestic spying issues of the "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001" (USA PATRIOT Act of 2001) as it authorizes the gathering of "foreign intelligence information" from U.S. citizens.

But the bill, which was renewed for four years by President Barack Obama in 2011, is primarily aimed at gathering intelligence from foreign nations.  In that regard, much of its authorizations deal with "spying" on foreign nations -- not solely U.S. citizens.

With citizens in the U.S. and Europe increasingly using "the cloud" -- services from companies like Microsoft, Facebook, Google Inc. (GOOG), and Apple, Inc. (AAPL) -- the question becomes how secure these resources are.

While the U.S. does not guarantee the privacy of its citizens online, the EU has a law titled the Data Protection Directive, which mandates that the EU protect the privacy of its citizens.  The Directive demands that citizens be informed any time private data is obtained.  The problem is that mandate does little to stop the U.S. from secretly seizing cloud data in the name of the PATRIOT Act according to warnings from Microsoft and top lawyers.

II. Our Laws Are Greater Than Yours

Microsoft warns that under the PATRIOT Act, it might not only be forced to hand over EU citizens' data; it might also be forced to do so secretly, without informing the EU.  This would directly violate the privacy protections the EU promises to enforce.

The company writes, "In a limited number of circumstances, Microsoft may need to disclose data without your prior consent, including as needed to satisfy legal requirements, or to protect the rights or property of Microsoft."

Sophia In't Veld (Netherlands) an EU parliamentarian, voiced outrage at the prospect, stating, "Does the Commission consider that the U.S. PATRIOT Act thus effectively overrules the E.U. Directive on Data Protection? What will the Commission do to remedy this situation, and ensure that E.U. data protection rules can be effectively enforced and that third country legislation does not take precedence over E.U. legislation?"

"I hope Commissioner Reding will respond soon, as this is really a key issue. Essentially what is at stake is whether Europe can enforce its own laws in its own territory, or if the laws of a third country prevail. I hope the Commissioner will ensure that the U.S. and other countries respect E.U. laws in E.U. territory. I don't think the U.S. would be amused if Europeans (or other non-U.S. authorities) were to get access to databases located within U.S. jurisdiction."

The EU and the U.S. already have an agreement called Safe Harbor, which allows for the sharing of data under certain restrictions such as the promise of reasonable data security, and clearly defined and effective enforcement.  In these cases the EU is informed of the request, so it can inform the affected citizens about it.

The problem is that the PATRIOT Act offers a far easier secret backdoor to the same information.  And there's little the EU can do to stop it.

Theo Bosboom, IT lawyer with Dirkzager Lawyers comments, "I'm afraid that Safe Harbor has very little value anymore, since it came out that it might be possible that U.S. companies that offer to keep data in a European cloud are still obliged to allow the U.S. government access to these data on basis of the PATRIOT Act. Europeans would be better to keep their data in Europe. If a European contract partner for a European cloud solution, offers the guarantee that data stays within the European Union, that is without a doubt the best choice, legally."

That could spell big trouble for companies like Google, Facebook, Microsoft, and Apple should the EU decide to apply restrictions or mandates to their services in order to protect its citizens' privacy from foreign powers.  Such restrictions could for the companies to switch to local, isolated serving to prevent the U.S. from having access to the data.  However, such schemes would be pricey to implement.

III. Does U.S. Privacy Bill Provide an Answer?

One potential solution may lie with the pending online privacy protection legislation proposed by Senators John Kerry (D-Mass.) and John McCain (R-Ariz.).  

The bill has received much resistance from the online data mining and advertising community, as it suggests the creation of a mandatory opt-out of data gathering.  Such an opt-out could be cost-prohibitive for smaller sites and could seriously undermine online advertising's profitability.

The bill could also make it harder to use the PATRIOT Act to grab information without public notification.

States EU Data Protection Commissioner Viviane Reding, "I welcome a draft Bill of Rights just introduced in the U.S. Congress as a bipartisan initiative of Democrats and Republicans. The Commission also shares the main objective of the Bill: strengthening individuals' trust in new technologies through compatible standards."

A compromise may be reached, but it's doubtful this will be the last we hear of this controversy.

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RE: What could happen.
By Reclaimer77 on 7/6/2011 2:18:03 PM , Rating: 0

The patriot act may be specific in it's scope but that scope is interpreted/twisted by human minds... that's the issue. Do you even understand what slippery slope is? Obviously not...

That danger ALWAYS exists though in everything. So until we have a time where our government is run by perfectly logical and incorruptible artificial intelligence, what are we to do?

There are far more dangers to our every day freedoms than the Patriot Act. But nobody seems to care about those. All we hear about is what "could" happen with the damn thing. There is absolutely nothing about the Patriot Act that impedes my every day life or threatens my privacy. Mostly because, you know, I don't make phone calls to foreign agents or terrorists.

I would argue that it removes freedom that was there before, hence "less freedom"...

Umm no. Before the Patriot Act they would get a judge or whatever to give them a warrant to tap your calls. You were NOT informed of the warrant at all. It was all done 100% behind your back. So how is there a difference in "freedom" between not knowing about a warrant wiretapping you and not knowing about the lack of one wiretapping you? Hello?

RE: What could happen.
By keegssj on 7/6/2011 3:09:44 PM , Rating: 4
Umm no. Before the Patriot Act they would get a judge or whatever to give them a warrant to tap your calls. You were NOT informed of the warrant at all. It was all done 100% behind your back. So how is there a difference in "freedom" between not knowing about a warrant wiretapping you and not knowing about the lack of one wiretapping you? Hello?

Big difference - A Judge looked at it and determined that it was a reasonable request. I have yet to hear anything that shows that the process didn't work. The vast bulk of the requests were granted, and quickly. So why did we need the loss of checks and balances?

RE: What could happen.
By Reclaimer77 on 7/6/11, Rating: 0
RE: What could happen.
By Spuke on 7/6/2011 3:24:35 PM , Rating: 2
The government is already allowed to "spy" on us without a warrant BUT that "spying" has a time limit before they must get a warrant to continue. My guess is that the Patriot Act expands on that or makes that more specific. Either way, it was already legal.

RE: What could happen.
By Reclaimer77 on 7/6/2011 4:32:48 PM , Rating: 1
I know that, but don't tell these kids. They believe the Patriot Act was the first time in history the Government did anything like this. If you went strictly by the liberal media coverage, you would think it was unprecedented or something.

Debating legality and the Federal Government is almost pointless at times anyway. They believe that they hold all the power, and they make all the laws, so whatever they want to do is legal anyway.

RE: What could happen.
By Fritzr on 7/6/2011 10:57:25 PM , Rating: 3
For those who would like to do a little digging into history, look up "Red Scare". This was the 'terrorism' threat of the 20's through the 80s or 90s.

If you needed to do anything that would get people upset you would state that the Reds must be fought and your actions are necessary to fight the Reds. McCarthy is the best known example, but others used this tactic also both in US and elsewhere. Even the Nazis used "The Reds are coming!" in their climb to power.

One legacy of the Red Scare is that political parties calling themselves Communist are outlawed even in countries where freedom of speech and/or political affiliation is supposedly guaranteed.

With the disintegration of the USSR the threat of the Reds lost it's power as a bogeyman. Today when someone needs to justify a power grab, they are fighting 'terrorism'.

I can see the EU passing a law requiring any company to notify the EU whenever information covered by their privacy act is requested along with a fine that will cause even Microsoft to be unhappy if they do not comply. That coupled with a US law with similar penalties if they DO notify the EU should have interesting results :P

As far as court control, that applies only if the courts are allowed to become aware of the violation. One of the abuses of the National Security Letters were FBI agents drafting NSLs without following procedure and then counting on the fact that it is illegal to mention such a letter to anyone, including the court that is supposed to give permission before the letter is delivered, to prevent the recipient from discovering that the letter was illegal and the FBI agent was violating the law.

This behavior was 'punished' by the FBI administration saying that they would handle it as an internal matter and all information about who, what, when and any action taken would be confidential and not to be released to anyone outside the FBI. This was not the only group abusing the Patriot Act, just one that made the news, until the serious punishment of allowing it to be handled as an internal matter was handed down and discussion was deemed to violate National Security :P

RE: What could happen.
By Paj on 7/7/2011 8:45:59 AM , Rating: 1
Are you actually serious? You actually think that there's nothing wrong with having judicial oversight into obtaining a warrant?

'Oh, but Ive done nothing wrong'

Its exactly how the fascist regimes of world war II got to exert the level of control they commanded. Slowly eroding freedoms, bit by bit, under the pretense of 'protecting' the citizens from some sort of 'menace'. Eventually you end up with a totalitarian state - and before anyone realises whats wrong, its already too late.

For someone so concerned about the power of 'big government', you're remarkable choosy in how you interpret it.

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