Microsoft is resisting federal prosecutors who want to search through a customer's email as part of a criminal inquiry, saying that following the judicial order would be a privacy violation.
The data in question is stored at a center in Ireland, something that Microsoft believes puts the email account beyond the reach of a domestic search warrant, The New York Times reported.
Handing over the email "would violate international law and treaties, and reduce the privacy protection of everyone on the planet," Microsoft said in a court filing.
Verizon has joined the fight as well, filing a brief on Tuesday with the same objections, and more companies are likely to echo their sentiments.
Microsoft's objection to the search warrant is believed to mark the first time such an order for digital information overseas has been challenged by a corporation. A New York federal magistrate judge granted the domestic search warrant in December; Microsoft lost the first legal round and is now gunning for a reversal in Federal District Court in New York.
As the first of its kind, the case could set a precedent for future privacy battles between tech giants and the federal government.
"This is a policy decision as well as a legal one," said Peter Swire, a professor at the Georgia Institute of Technology, who served on a White House advisory group on intelligence and communications technologies last year, according to the Times.
Microsoft's argument is that the guidelines for an online search warrant should mirror those in the physical world, following the rule that "standard of proof for a search warrant is 'probable cause' and 'particularity'--that is, a person's name and where the person, evidence or information reside," the Times reported.
Privacy advocates are concerned that upholding the search warrant will open the door for unlimited government investigations in the online world.
"United States search warrants do not have extraterritorial reach," said Lee Tien, a lawyer for the Electronic Frontier Foundation, as quoted by the Times. "The government is trying to do an end run."
On the other hand, the Justice Department says that Microsoft is overreaching and an impediment to the search warrant would be a risk to authorities who are trying to stop criminal activity.