DOJ Overreach Could Kill The Digital Economy

Denys Emmert Writer, American Consumer Institute
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The health of the digital tech economy is inextricably linked to the health of the U.S. economy. According to a newly released Brookings Institute study, 61 percent of all U.S. exports were digitally delivered, and international digital trade was responsible for adding 2.4 million jobs.

McKinsey Report estimated that improved use of data could generate as much as $5 trillion in additional economic value each year in seven industries alone — education, transportation, consumer products, electricity, oil and gas, healthcare, and consumer finance. But the U.S. Department of Justice’s insistence on law enforcement overreach could jeopardize the U.S. share of the digital economy.

Recently, DOJ tried to force an Irish-based subsidiary of Microsoft to turn over the stored emails of a suspected Irish drug trafficker. The problem was that the suspected drug trafficker lived in Ireland, was not a U.S. citizen or resident alien, and his emails were hosted on a server physically located in Ireland.  DOJ’s attempt to subpoena these emails would extend DOJ’s jurisdiction beyond the territorial boundaries of the U.S.  This overreach by the DOJ, according to one estimate, could cost U.S. tech companies as much as $180 billion a year and 2 million Americans their jobs.

Many countries, especially members of the European Union, have been concerned for years with how personal information is being used. Since the NSA scandal broke last year, those concerns have been amplified. Efforts by the DOJ to go around existing treaties to seize the data and emails of non-U.S. citizens stored in other countries has put U.S. businesses in the tough spot of trying to comply with both U.S. law and the privacy laws in the countries where they do business.

According to reports, Verizon lost a major wireless contract in Germany and other companies, like Google, Microsoft, IBM, Amazon and Cisco, are put at risk, as countries begin to put restrictions that require data on its citizens to be stored within their country. In response to concerns regarding NSA surveillance, even Russia has enacted legislation to require local storage of personal data in its country. Restrictions of this type, if widely adopted, would severely threaten the Internet and the digital economy.

U.S. Senators Orrin Hatch (R-UT), Chris Coons (D-DE), and Dean Heller (R-NV) recently proposed a bill that would prevent the DOJ from continuing to overreach abroad and hurting U.S. companies. S.2871, the Law Enforcement Access to Data Stored Abroad Act, also referred to as the LEADS Act would make U.S. government agencies comply with existing treaties with other countries and address fears of NSA type spying or the collection of personal information of non-citizens abroad.

According to the proposed legislation, “it has been well established that courts in United States lack the power to issue warrants authorizing extraterritorial searches and seizures, and neither ECPA [Electronic Communications Privacy Act] nor subsequent amendments extended the warrant power of courts in the United States beyond the territorial reach of the United States.”

The LEADS Act authorizes search warrants extraterritorially only for electronic communications of U.S. citizens, U.S. resident aliens, or businesses incorporated, and the U.S. Government agencies must notify an individual within ten business days if a warrant has been executed. This notice requirement may be extended to up to 90 days if the court agrees with the agency that by notifying the individual if it would have an adverse result on the investigation. In cases where the warrant would violate an existing law of the foreign country, the court could modify or vacate the warrant.

If the U.S. hopes to protect its economic advantage in digital trade, the time to act is now, before the adverse trade impact materially alters future economic opportunities for U.S. tech companies. The DOJ needs to end its overreach, and Congress needs to find a workable policy solution to prevent American citizens and corporations from the economic consequences caused by the mounting global distrust of the U.S. Government.

Denys Emmert writes on digital tech issues for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization.  For more information, visit www.theamericanconsumer.org.