Newly unsealed court documents have revealed a secret legal battle between Microsoft and one of America’s leading prosecutors focused on chasing Chinese technology companies breaking U.S. law.
U.S. attorney Alexander Solomon—who also happens to be the lead prosecutor on two criminal cases involving Huawei—just scored a big victory in that tussle, forcing Microsoft to keep quiet about a demand to hand over customer emails.
That request was originally filed in August 2018 and was followed by a gag order. Both were kept secret until Wednesday, when it emerged Microsoft was told to hand over emails, text messages and voicemails belonging to two employees at one of its unnamed enterprise customers. Microsoft said that while it could provide the data, it should be allowed to inform executives at that unnamed company. It asked the government to lift a gag order that had prevented it from informing anyone. As revealed in a Microsoft blog post and court documents unsealed Wednesday, the software giant lost that fight, though it will appeal.
Nothing was said about why the government wanted those emails. But there are numerous indications the data grab is related to America’s fight against Chinese businesses’ breaches of U.S. law.
To start, the prosecutors in the case are both leading high-profile cases into various offenses committed by Chinese nationals and businesses against the U.S. And one, Alexander Solomon, is the lead prosecutor in two cases in which Huawei is at the center.
The biggest is the one in which Huawei stands accused of illegally exporting equipment to Iran from the U.S. via a subsidiary called Skycom, and then repeatedly lying about the deals. Not only were Huawei, its U.S. business and Skycom charged, so was the daughter of the Huawei CEO and the current CFO, Wanzhou Meng, who is currently fighting extradition from Canada. Huawei has pleaded not guilty to all charges.
The Huawei entities were, in January this year, charged with bank fraud, wire fraud and violations of the International Emergency Economic Powers Act (lEEPA), a law that Trump recently used to enforce sanctions on Iran. As per court documents detailing the order on Microsoft, the two employees of the unnamed customer are suspected of similar crimes, namely wire fraud, money laundering and breaches of lEEPA.
Going deeper, those staff at the Microsoft customer are being investigated for working for one multinational corporation and conspiring with another to violate the lEEPA. They did so “by sending and attempting to send U.S. origin goods to [a company] in [a foreign country], in contravention of U.S. sanctions,” according to a court filing.
The name of the customer remains a mystery. It’s unlikely to be Huawei, though. That’s because Microsoft was asked to hand over the emails of two “low-level employees in one business unit of a multinational, publicly listed Microsoft customer.” Huawei is not publicly listed; its private ownership has, in fact, been the subject of much speculation. Though it claims to be owned by its employees, academics have suggested that’s misleading.
The prosecutor, Solomon, is also leading a case against Chinese professor Bo Mao, who has been accused of stealing technology from a California company for a Chinese company, reportedly Huawei. Mao has pleaded not guilty on a single charge of wire fraud.
Huawei hadn’t responded to a request for comment on the above cases. Microsoft also hadn’t provided comment. The prosecutor’s office declined to comment.
Microsoft’s fight with the U.S.
But Microsoft had a lot to say in court filings and a blog post about the government’s attempts to completely silence the maker of the Windows operating system.
It argued that 20 years ago, the government would go directly to the company that controlled the data, not its cloud-based tech supplier. Microsoft said it was “disturbing” that governments were now going to tech companies instead. And it therefore should be allowed to at least tell employees at an affected company about a government data grab, as long as it wouldn’t jeopardize an investigation. “The government cannot justify such a total ban on Microsoft’s speech,” the company’s lawyers said.
Dev Stahlkopf, Microsoft’s corporate vice president and general counsel, said the company would “continue to stand up for the principle that our customers are entitled to know when the government obtains their data.”
“Absent extraordinary circumstances, government agents should seek data directly from our enterprise customers, and if they seek our customers’ data from us, they should allow us to tell our customers when demands are made,” Stahlkopf added.
“We believe strongly that these fundamental protections should not disappear just because customers store their data in the cloud rather than in file cabinets or desk drawers.”
Microsoft has also been vocal about restrictions on American companies doing business with Huawei. Company president Brad Smith recently said the U.S. should revisit the ban preventing Microsoft and others from letting Huawei run American software.