US District Judge Loretta A Preska in Manhattan said she agreed with the findings of a magistrate judge who approved a sealed search warrant in December for a consumer email account Microsoft stores in Dublin, Ireland.
Preska said it was a question of who controlled the data rather than where it was stored. The information could be produced by Microsoft in the United States without intruding on the foreign sovereignty of Ireland, she added.
The US-based software company has said rulings forcing it to turn over emails threaten to rewrite the Constitution's protections against illegal search and seizure and could damage US foreign relations. Its arguments were joined by large technology companies, including Apple Inc., Cisco Systems Inc., Verizon Communications Inc. And AT&T Inc.
The judge stayed the effect of her ruling to give the company time to appeal.
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Brad Smith, Microsoft's general counsel and executive vice president, said in a statement that Preska's ruling was not the final word.
"We will appeal promptly and continue to advocate that people's email deserves strong privacy protection in the US and around the world," he said.
E Joshua Rosenkranz, Microsoft's attorney, had argued unsuccessfully that the search warrant amounted to the extension of US law enforcement authority to another country.
He said it also increased the likelihood that other countries would try to access information in the United States.