Microsoft Seeks Privacy Law to Aid Cloud Computing

Microsoft Corp. is urging an overhaul of U.S. laws for electronic privacy to help new services such as cloud computing, a technology that may double sales in five years.

As more data are stored on remote servers and away from personal computers, a 1986 digital law needs to be updated to give consumers confidence their information is protected, Brad Smith, Microsoft’s general counsel, said yesterday at a Senate Judiciary Committee hearing in Washington.

“The law needs to catch up,” Smith said after the hearing. Cloud computing is “a critical part of the future and quite central to all that we’re doing.”

Collecting and storing data using remote computer servers, called cloud computing, may generate global sales of $148.8 billion by the end of 2014, up from $58.6 billion last year, according to researcher Gartner Inc. in Stamford, Connecticut. If consumers worry about online security, it could limit the industry’s growth, Smith said in prepared testimony.

Microsoft sells cloud-computing software such as HealthVault, which helps patients manage chronic health conditions by storing data online, and Windows Azure, which lets a company such as Domino’s Pizza Inc. manage its orders when demand is high, Smith said. While the U.S. Constitution shields letters and telephone calls from government seizure, data transferred to a third party may lack such protection.

Photographer: Kimimasa Mayama/Bloomberg

Microsoft’s general counsel Brad Smith said cloud computing is “a critical part of the future and quite central to all that we’re doing.” Close

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Photographer: Kimimasa Mayama/Bloomberg

Microsoft’s general counsel Brad Smith said cloud computing is “a critical part of the future and quite central to all that we’re doing.”

Google, Amazon.com

Representatives of Google Inc. and Amazon.com Inc. testified today at a House Judiciary Committee hearing in support of recommendations to update the privacy law by Digital Due Process, a coalition that also draws support from AT&T Inc., Intel Corp. and Internet technology companies.

“Compelled disclosure of content should require a search warrant, just as obtaining content out of a person’s desk drawer would,” said Paul Misener, vice president for global public policy at Amazon.com.

The Electronic Communications Privacy Act was passed by Congress in 1986 in an effort to give law enforcement agencies access to information while preserving an individual’s right to privacy.

‘Reasonably Protected’

“We recognize that enterprises and individual consumers will only use new technologies if they have confidence that their information will be reasonably protected,” Smith said in his testimony yesterday.

The law provides different levels of protection for electronic messages, he said. E-mails stored for less than 180 days have more protection than older messages. A document stored on a PC’s hard drive has greater protection that a similar item saved on a “cloud,” he said.

“Microsoft supports changes that will ensure that users do not suffer a decrease in their privacy protections when they move data from their desktop PCs to the cloud,” Smith said in his prepared comments.

Senator Patrick Leahy, the committee’s chairman and a Vermont Democrat, said the panel would begin work on legislation to overhaul the law, without giving a specific time line.

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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