Microsoft Corp. (MSFT) Finds A New Safe Harbor In Germany

Microsoft Corporation (MSFT)

Microsoft Corp. has decided that it is time for data trustees instead of vendor centers in Germany. Under this new system, the firm will not run any data center even in Germany. It will give all the power over data to its German trustees. With the US tech firms facing problems over the revocation of Safe Harbor provisions, Microsoft seeks a viable solution.

Microsoft’s Data Trusteeship System In Germany

This new system of data trusteeship means that a German vendor will be in control of all data. Even Redmond, Microsoft’s main office, will not be able to access it. This is seen as a move against the US government agencies. As the theory goes, if Microsoft cannot access it, those agencies can’t as well.

As per Satya Nadella, CEO, Microsoft, these data centers lets one use full power of cloud. It also retains control of data in German hands.

The proposed new system is different from the own vendor centers run in Germany. These centers though they are based outside USA, are still owned by Microsoft. This translates to that if USA wants the data, it can ask US-based Microsoft to give it to them. But in this new system, since Microsoft does not own it, it cannot give USA access to the data.

Other Tech Biggies Already Facing The Heat

Post Edward Snowden’s leaks of secret US documents, Facebook Inc  faced the heat in Ireland. A case by Max Schremes, an Austrian, led to invalidation of the Safe Harbor provisions. And Facebook waits a judgment that will tell whether it can transfer data or not.

It is known that over 4500 US companies relied on Safe Harbor provisions. This new ruling poses a huge problem for all of them. Apple Inc. has already invested over $1 billion to solidify the European framework. If new US-EU data transfer agreement is to be made, many tech biggies will face issues.

Eric Schmidt, chairman of Alphabet Inc. , bashed the revocation of the provisions. He said that this is destroying “one of the greatest achievements of humanity”.  However, James Killick of Open Rights Group rebuffed saying: “EU Courts can’t ignore the rights of citizens even if domestic governments do.” As per him, US took too forward a step and that has backfired.

In fact, not only Ireland, Germany and Russia have already raised concerns about it already. Russia declared that a new data law is coming into effect in September this year. German data commissioners said they are looking into data transfers by US companies such as Facebook and Google. A trend of balkanized internet is what we are seeing nowadays.

With the new move, Microsoft wants to tackle the upcoming storm. However, as Paul Miller, cloud computing analyst from Forrester, notes, we have to wait and watch how it stands up legally. Time will tell.

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Adam Green is an experienced writer and fintech enthusiast. He he worked with LearnBonds.com since 2019 and covers a range of areas including: personal finance, savings, bonds and taxes.

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