Microsoft assures non-US businesses it won't give any data without litigation

Microsoft Corp pledged late Wednesday to fight in court against any attempt by U.S. intelligence agencies to seize its foreign customers' data under American surveillance laws, one of a series of steps aimed at reassuring nervous users abroad.

The maker of the world's most popular computer operating system said it had never turned over any such data under the Foreign Intelligence Surveillance Act and did not believe that authorities are entitled to the information if it is stored abroad.

"We are committing contractually to not turning it over without litigating that issue," Microsoft General Counsel Brad Smith said in an interview with Reuters.

Smith also said that Microsoft would dramatically increase the amount of encryption it uses for internal traffic, following similar moves by Google Inc and Yahoo Inc in the wake of reports that the National Security Agency had tapped into their facilities overseas without oversight by the Foreign Intelligence Surveillance Court.

(Also see: Yahoo follows Google, vows to encrypt all website traffic)

Smith said Microsoft was caught by surprise by reports in The Washington Post, based on documents leaked by former contractor Edward Snowden, that the NSA had successfully penetrated the other companies and perhaps targeted it as well.

"That really was like an earthquake sending shock waves through our industry," Smith said. Past discussions with federal officials, he said, have always been based on working out what the law required, without any hint that the company might be subjected to attacks based on "technological brute force" instead of legal process.

Addressing another concern, a spokeswoman said the company did not believe it could be ordered to install spyware on a user's machine and that Microsoft would fight any such directive in court.

Microsoft said it would encrypt consumer data that it stores and would work with other email providers to make sure that messages stay secure when they move from a service such as Microsoft's Outlook.com, formerly Hotmail, to another, such as those from Google or Yahoo.

Microsoft said it would also expand the use of regional centers that allow governments worried about U.S. "back doors" in its software to inspect the source code.

The technical measures will move Microsoft close to parity with other major Internet companies in their protections for consumers.

In the cloud business, which provides remote storage and computing power for companies, Microsoft's top rival is Amazon.com Inc. An Amazon Web Services spokeswoman said her employer, like Microsoft, provides tools to help cloud customers encrypt their sensitive data and warns them if legal papers have been served seeking access.

She said she did not know whether papers presented under the intelligence laws, which are secret, had been used to obtain data about international customers.

© Thomson Reuters 2013