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microsoftMicrosoft looks set to be found in contempt of court after defying an order from a US judge that it should hand over data stored in Ireland.

Judge Loretta Preska, chief of the US District Court in Manhattan, has lifted a stay on her previous order that Microsoft must give email messages held in an Irish data center to US prosecutors investigating a criminal case.

However, Microsoft is refusing to comply. While the judge has concluded that the order itself isn’t appealable, a refusal to play ball by Microsoft could force her to find the company in contempt. Microsoft could then appeal against that finding to continue arguing its case.

“We will appeal promptly and continue to advocate that people’s emails deserve strong privacy protection in the US and around the world,” says Microsoft general counsel Brad Smith in a statement. “The only issue that was certain this morning was that the District Court’s decision would not represent the final step in this process.”

The disagreement hinges on whether the servers on which the data is kept are subject to US jurisdiction. In July, the judge ruled that Microsoft must hand over the emails because, while they were stored overseas, they were under the control of a US company.

Soon after, though, she suspended the ruling after an outcry from technology companies complaining that allowing US authorities to search and seize data held internationally was illegal.

iHLS Israel Homeland Security

Preska has now concluded that Microsoft has no right to appeal the order and lifted the suspension, meaning that the company is legally required to hand over the emails immediately. Unfortunately, this would put in in breach of Irish law – not a great situation to be in. There are, of course, legal treaties covering the sharing of data internationally, and Microsoft is arguing that these procedures should be followed.

But the company’s biggest concern is that handing over the data would alienate customers as well as governments. Trust in the cloud is a fragile thing, particularly following recent revelations that the National Security Agency has been helping itself to data held on US servers.

Other companies, including AT&T, Apple, Cisco and Verizon have submitted briefs in support of Microsoft, concerned that customers will no longer trust them. The German government, for example, is reported to have told Microsoft that it won’t use data storage from US companies unless the ruling is overturned.