[bestbits] Microsoft unveils German data plan to tackle US internet spying

[Carolina Rossini]

http://www.ft.com/cms/s/0/540a296e-87ff-11e5-9f8c-a8d619fa707c.html#axzz3r4thbhrI



November 11, 2015 8:46 am
Microsoft unveils German data plan to tackle US internet spying

Murad Ahmed in Berlin and Richard Waters in San Francisco

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[image: Satya Nadella speaks during a keynote address at the DreamForce
Conference in San Francisco, California, US]©Bloomberg
<http://www.ft.com/servicestools/terms/bloomberg>

Microsoft <http://markets.ft.com/tearsheets/performance.asp?s=us:MSFT> will
allow foreign customers to hold data in new European facilities designed to
shield customers from US government surveillance, in one of the most
drastic corporate responses yet to the American internet spying scandal
<http://www.ft.com/indepth/us-security-state>.

On Wednesday, the US software company said it was setting up new data
centres in Germany that will be under the control of Deutsche Telekom
<http://markets.ft.com/tearsheets/performance.asp?s=de:DTEX.N>, the German
telecommunications group. The legal and technical arrangement is intended
to put the data of European government and business customers, along with
millions of citizens, out of reach from US authorities.

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Technology analysts say it is a “watershed moment”, describing the
manoeuvre as the first time a major US tech group had accepted its
inability to protect customer data from US governmental over-reach
<http://www.ft.com/cms/s/0/76797b80-7733-11e5-a95a-27d368e1ddf7.html#axzz3r6IAou4w>
.

Microsoft’s initiative could have a ripple effect across the industry,
creating a tough new privacy standard that customers may soon also demand
from other “cloud computing” providers such as Google
<http://markets.ft.com/tearsheets/performance.asp?s=us:GOOGL>, Amazon
<http://markets.ft.com/tearsheets/performance.asp?s=us:AMZN>and Oracle
<http://markets.ft.com/tearsheets/performance.asp?s=us:ORCL>.

Silicon Valley groups are struggling to regain the trust
<http://www.ft.com/cms/s/0/683f8cc0-6da7-11e5-aca9-d87542bf8673.html#axzz3r6IAou4w>
of
European customers in the wake of disclosures by NSA whistleblower Edward
Snowden about widespread internet surveillance by US intelligence agencies.

Mr Nadella told the Financial Times that the effort was designed to regain
the trust of customers which had been lost as a result of the Snowden
disclosures. “We need to earn both trust of our global customers and
operate globally. That’s at the cornerstone of how we’ve done business and
how we will continue to do business,” he said.

In response, US tech groups have moved to build data centres in European
countries. But many of the region’s customers remain unsatisfied that these
efforts alone can protect against snooping.

“I think Microsoft have come to the conclusion that they can’t get away
from being a US company,” says Carsten Casper, analyst at Gartner, the
research group. “I find that more honourable than others who try to move
their data centres to Europe to appease customers, but how good is it to
have data centres in those countries if you can access it from abroad with
no particular problem?”

Analysts say Microsoft’s concession could complicate negotiations between
US and EU politicians on a new transatlantic data sharing pact
<http://www.ft.com/cms/s/0/4b0e9cce-83d5-11e5-8095-ed1a37d1e096.html#axzz3r6IAou4w>
known
as “Safe Harbour”. Talks have been faltering for months over the thorny
political issue of surveillance.
I think Microsoft have come to the conclusion that they can’t get away from
being a US company

- Carsten Casper, Gartner analyst
*Tweet* this quote

Under Microsoft’s German arrangement, T-Systems, a Deutsche Telekom
subsidiary, will operate two new data centre facilities in the country that
will open for business in late 2016. They will be used solely to house
information on Microsoft European customers, who will also be asked to pay
more to store data in this way.

But T-Systems will act as a “trustee” of the facilities, with Microsoft
insisting its employees will have no access to the data held at the
facilities without the German company’s permission.

The companies believe this arrangement means Microsoft will not have to
respond to governmental demands for information held in these data centres,
forcing official requests to go through German authorities instead.

Germany’s data protection laws, enforced by powerful privacy watchdogs, are
considered to be among the continent’s strictest.

The trustee solution is also a response to Microsoft’s legal battle
<http://www.ft.com/cms/s/0/8cacd92a-b7bb-11e4-981d-00144feab7de.html#axzz3r6IAou4w>
against
an order from a New York court, which is trying to force the software group
to hand US authorities emails from a US citizen stored on a Microsoft
server in Ireland.
Opinion

*Worldwide fight over personal data has barely begun
<http://www.ft.com/cms/s/0/683f8cc0-6da7-11e5-aca9-d87542bf8673.html#axzz3qytdspuq>*
[image: White collar criminal in blue suit is hacking holes into the
security helix of a virtual firewall. His left hand is removing unlocked
data packets with a swiping movement. Concept for cyber attack.]

One can’t blame Americans for complaining about European hypocrisy, writes
Evgeny Morozov

Read more
<http://www.ft.com/cms/s/0/683f8cc0-6da7-11e5-aca9-d87542bf8673.html#axzz3qytdspuq>

Brad Smith, Microsoft’s president and chief legal officer, has made the
case a centrepiece of the company’s pushback against intrusive government
demands for personal information, pledging to take the case to the US
Supreme Court if necessary.

Executives at rival technology companies are concerned about the
implications of the high-profile case because of the precedent it will set
in the running of their businesses. Microsoft’s German plan would address
this issue, should it lose the case.

But Paul Miller from Forrester Research says the trustee model is also
likely to come under legal attack in the US.

“As with all new legal approaches, we don’t know it is watertight until it
is challenged in court,” he says. “Microsoft and T-Systems’ lawyers are
very good and say its watertight. But we can be sure opposition lawyers
will look for all the holes.”

Last month, Europe gave a stinging rebuke
<http://podcast.ft.com/2015/10/07/europes-safe-harbour-ruling-unpacked/> to
the transatlantic digital alliance, scrapping a 15-year pact that allowed
US tech companies to ship personal information about European citizens
wholesale to the US.

The European Court of Justice decision to invalidate the “Safe Harbour”
<http://www.ft.com/intl/cms/s/2/7544e716-6b87-11e5-aca9-d87542bf8673.html#axzz3ntAT6SP8>
agreement
has left thousands of businesses scrambling to change their legal footing
to avoid breaking the law. Europe’s data protection authorities have given
companies until January to find alternative data transfer agreements.

The US and EU are working to secure a new Safe Harbour treaty but analysts
say Microsoft’s decision may strengthen the resolve of EU diplomats who are
holding out for stronger assurances over whether citizens data will be
subsumed into the US surveillance regime.

“I think it will put pressure on negotiators trying to reach a new
transatlantic privacy agreement,” says Mr Casper. “There’s a new piece in
the puzzle now.”
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