Smaller email encryption companies may press tech giants like Microsoft & Google, expert predicts

As Microsoft continues its battle against the US government in a federal appeals court, more customers will likely switch to smaller email encryption companies for a greater protection of their private data, the co-founder of one such company told RT.

On Wednesday, Microsoft asked a federal appeals court to block the US government from forcing it to turn over a customer’s email stored on servers in Ireland. The company argues that the precedent will open the door for other countries to seize information on servers in the US whenever they want.

"We would go crazy if China did this to us," Joshua Rosenkranz, a lawyer for Microsoft, told the 2nd US Circuit Court of Appeals in New York.

The government, for its part, insists that it’s not “a question of ownership,” but rather of “custody and control.”

Enacted in 1986, the Stored Communications Act potentially gives the US government jurisdiction to order the disclosure of "stored wire and electronic communications and transactional records" held by third-party internet service providers. However, the law came decades before providers like Microsoft started using servers abroad.

So, the question now is whether the Department of Justice’s warrant is an "extraterritorial" application of the law.

“It's not just about privacy or respect for the laws of other countries, but how a law passed in 1986 — before email, instant messaging and social media — should now be applied in a digital world where communications and technologies continue to evolve," Craig Newman, a data privacy lawyer, told USA Today after attending the hearing.

READ MORE: US pressured Norway to arrest & extradite Snowden, seize all devices – documents

Since Edward Snowden revealed the National Security Agency’s snooping activities, a need for encrypted email sites has spawned. Tech experts now predict that more and more customers will turn to companies that encrypt and store customer’s information abroad.

“Like Snowden told us, It’s really the only way to protect your personal information from Big Brother,” said Katherine Albrecht, a longtime privacy advocate and co-founder of StartMail, a private email service.

Albrecht predicts that American tech giants like Google, Yahoo and Microsoft will lose billions of dollars, “because people are flocking to other smaller companies out of the country.”

Companies like StartMail encrypt emails so that even if the email is intercepted or obtained, it could not be read by the third party. In the case of Albrecht’s company, it is located in the Netherlands.

“All our servers are not in the cloud – they are 100 percent owned, it’s 100 percent Dutch and there is not really any cloud jurisdiction,” she explained.

Albrecht says that she believes that “we are going to see an increase” of offshore private companies like hers.

“The reality is that any time you let your data out of your control, you are subject to the laws of a number of countries. Essentially when you let data out in the cloud, you don’t know where the company you are doing business with is storing it,” she said.

One of the problems, Albrecht added, is that some people still don’t realize that companies like Google or Yahoo make copies of emails and store them even after emails are deleted.

“And they read all of your emails for advertising purposes,” she added. “The databases that they have created have become tempting targets for not only the US government but for Chinese governments who go after dissidents in many countries. So I think we are going to see people moving to smaller email programs, offshore email programs and particularly encryption.”

In April, Google updated its privacy terms and conditions and, by doing so, essentially admitted that the company does look through all the data customers share when they use its services.

"When you upload, or otherwise submit, store, send or receive content to or through our Services, you give Google (and those we work with) a worldwide license to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content," it said.

The company, however, said that it needs its customers’ data to improve and develop services.