Microsoft (MSFT) Stock Rises After Winning Data Security Case

NEW YORK (TheStreet) -- Shares of Microsoft  (MSFT) are climbing 0.36% to $53.71 in mid-afternoon trading on Thursday after the company won a federal appeals court ruling that determined a data warrant didn't apply to information stored on servers overseas.
Microsoft had been challenging a 2013 warrant from a federal judge in New York seeking the email contents of a suspect in a drug trafficking investigation, the Wall Street Journal reports.
Some of the data were stored in Microsoft computers in Ireland, and Microsoft contended that it shouldn't have to comply with a U.S. court order for data outside of the country.
Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B+.
Microsoft's strengths such as its reasonable valuation levels, good cash flow from operations, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: MSFT
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.

UK gov says new Home Sec will have powers to ban end-to-end encryption

IPBill During a committee stage debate in the UK's House of Lords yesterday, the government revealed that the Investigatory Powers Bill will provide any Secretary of State with the ability to force communication service providers (CSPs) to remove or disable end-to-end encryption.
Earl Howe, a minister of state for defence and deputy leader in the House of Lords, gave the first explicit admission that the new legislation would provide the British government with the ability to force CSPs to “develop and maintain a technical capability to remove encryption that has been applied to communications or data.”
This power, if applied, would be imposed upon domestic CSPs by the new Home Secretary, Amber Rudd, who was formerly the secretary of state for energy and climate change. Rudd is now only the fifth woman to hold one of the great offices of state in the UK. As she was only appointed on Wednesday evening, she has yet to offer her thoughts on the matter.
Present at the House of Lords debate, the Liberal Democrat member Lord Strasburger complained that “the implication of what [the government] is saying is that no one may develop end-to-end encryption. One feature of end-to-end encryption is that the provider cannot break it; encryption is private between the users at both ends. He seems to be implying that providers can use only encryption which can be broken and therefore cannot be end to end, so the next version of the Apple iPhone would in theory become illegal. I think that there is quite a lot of work to be done on this.”
Earl Howe responded: “I was certainly not implying that the government wished to ban end-to-end encryption; in fact, we do not seek to ban any kind of encryption. However, there will be circumstances where it is reasonably practicable for a company to build in a facility to de-encrypt the contents of communication.”
As Labour member Baroness Hayter attempted to explain: “There will be times when state security undoubtedly needs access to encrypted information for a specific investigation. This is not the problem. The problem is whether the government would ever require a company to engineer such access, enforcing the company to create a model which, if then followed by other nations with perhaps less security than ours, would lead to a lowering of standards.”
Earl Howe stated that the government’s central point was that it did “not think that companies should provide safe spaces to terrorists and other criminals in which to communicate. They should maintain the ability when presented with an authorisation under UK law to access those communications”.

The admission follows Theresa May’s confession last November that, since the turn of the millennium, secretaries of state have been issuing secret directions under section 94 of the Telecommunications Act 1984, without any judicial authorisation. The first glimpse of oversight these received was published in a report by the Interception of Communications Commissioner’s Office (IOCCO) last week, which revealed that at least 23 directions were currently in effect on national security grounds.
Under the Investigatory Powers Bill, section 94 of the Telecommunications Act will be repealed, but secretaries of state will have the new power to issue national security and technical capability notices to much the same effect. Section 94, as Howe admitted, “has been used for a range of purposes, including for the acquisition of communications data in bulk” though these are now being codified in statute.
The oversight being introduced for these powers is an obvious improvement on the complete lack of oversight before through the new Investigatory Powers Commissioner, and in a recent amendment to the bill the government added the need for a Judicial Commission to approve both national security and technical capability notices.
Not all parties are completely satisfied, however, with IOCCO continuing to recommend — as explained in its evidence to the bill’s Joint Committee [PDF] — that an Investigatory Powers Commission, rather than just a commissioner, would be necessary for the purpose of providing a “clear legal mandate for the oversight body".
IOCCO explained that: “The reality is that the Judicial Commissioners will only be performing a very narrow part of the oversight – the prior authorisation of some of the more intrusive investigatory powers. The bulk of the oversight will actually be carried out by inspectors and staff within the Commission who need a clear legal mandate to require information from public authorities, to launch and undertake audits, inspections, inquiries, investigations and react in real time when non-compliance or contraventions of the legislation are discovered during an inspection.”
Speaking to The Register shortly before the debate, Lord Strasburger said: “It’s a tragedy that proper scrutiny and improvement of the Investigatory Powers Bill is not happening because politicians and the public are totally distracted by Brexit and the machinations of the two main parties.”
The bill, noted Strasburger, was “what David Cameron described as one of the most important bills of the entire parliament, but it’s progressing with not much attention from anybody. It is not receive the scrutiny and attention that it absolutely deserves, apart from the Liberal Democrats and a few cross-benchers in the House of Lords.” ®

First-ever Xbox One S hardware bundle is made for Gears of War fanatics.

If you’re looking to drop some cash on Microsoft’s upgraded Xbox One S console when it launches in August, you may want to wait for an upcoming limited edition version that bundles in an early-access copy of Gears of War 4, among other exclusive bonuses.
Microsoft’s upcoming Gears of War 4-themed Xbox One S console bundle also includes a laser-etched limited edition console and a uniquely themed controller, giving Gears of War fanatics incentive to invest in the hardware upgrade.
Launching in September at a retail price of $450, the Gears of War 4 Xbox One S hardware bundle includes an Xbox One S 2TB Console, a vertical stand, an Xbox One controller, and a digital code that grants early access to Gears of War 4 prior to its retail release on October 7.

The console itself sports a blood-red color scheme and claw-like etchings across its exterior. The included controller follows suit with similar coloring and branding, setting itself apart from previously issued Xbox One controllers with a distinct red D-pad and a Gears of War series logo.
Additional digital bonuses bundled with the package include codes for Gears of War 4 weapon skins, character outfits, multiplayer lobby emblems, and “Gear” packs that award players randomly distributed in-game items.
Aesthetics and bonuses aside, the package is otherwise equivalent to Microsoft’s standalone Xbox One S 2TB console, which launches on August 31. Compared to first-generation Xbox One hardware, the Xbox One S is 40 percent smaller in size and supports 4K video resolutions for Blu-rays as well as the console’s Netflix and Amazon Video apps.
Microsoft additionally revealed that two different Gears of War 4-themed Xbox One controllers will be sold exclusively via GameStop and the Microsoft Store for $75 each starting in September. Featuring redesigned grips and Bluetooth pairing functionality, each controller will include codes for extra Gears of War 4 lobby emblems and Gear packs.

Microsoft wins major victory in legal fight over data center access

After years of arguments, Microsoft has won a major victory in its legal fight over US access to information stored in a company data center in Ireland. In a decision filed today by the Second Circuit Court of Appeals, judges ruled that US investigators can’t use the Stored Communications Act to compel access to the data, as it is physically located outside of US borders. As a result, the court found that Microsoft has "no remaining lawful obligation to produce materials to the government."

It’s a major victory for Microsoft, which has maintained that extraterritoriality was necessary to fulfill the company’s privacy policy to users. A number of outside groups made arguments in support for Microsoft’s case, including corporate partners and rivals like AT&T, Verizon, and Apple, as well as privacy groups like the Electronic Frontier Foundation and American Civil Liberties Union.

Microsoft argued that because the data was stored in Ireland, it was subject to Irish rather than US law, regardless of the company providing the infrastructure. That feature is central to Microsoft’s ambitions as a cloud provider, allowing the company to compete with local storage companies that are not otherwise subject to US requests. The nationality of the target of the investigation is still undisclosed.

The government’s case focused on Microsoft’s obligations as a company based in the United States. Since the data was easily accessibly to Microsoft and the company itself could be compelled by the CDA, prosecutors argued the company was legally in possession of the data, regardless of international borders. Ultimately, the judges found those arguments unpersuasive.

The question of the physical location of data centers remains a difficult one, as governments look to impose national borders on fundamentally international information networks. In recent years, a number of governments have passed data localization laws, a response to those issues as well as covert access efforts by US intelligence services revealed in the Snowden documents. Germany, Brazil, and Russia have all taken up measures requiring companies to store citizens’ data within national borders, both limiting foreign access to the data and putting it within easier reach of national law enforcement agencies. Some experts are concerned that the trend toward localization could ultimately fracture the internet along national lines, making it harder for individual services to share data and products across borders.

"Privacy... is an abstract concept with no obvious territorial locus."

It’s unclear how long Microsoft’s victory will hold up. The appeals court ruling can still be overturned by the Supreme Court, and more aggressive legislation could supersede both. Law enforcement agencies have also increasingly looked toward diplomatic methods for obtaining data stored overseas. The UK and US are currently discussing a Mutual Legal Assistance Treaty (or MLAT) which would allow each nation to serve warrants directly to companies without navigating foreign courts.

In a concurring ruling, one of the appeals court judges openly pleaded for legislative action to revise the existing law. "Although I believe that we have reached the correct result as a matter of interpreting the statute before us, I believe even more strongly that the statute should be revised," Judge Gerard Lynch wrote in his concurrence. "I concur in the result, but without any illusion that the result should even be regarded as a rational policy outcome, let alone celebrated as a milestone in protecting privacy."

"Privacy... is an abstract concept with no obvious territorial locus," Lynch continued. "It seems at least equally persuasive that the invasion of privacy occurs where the person whose privacy is invaded customarily resides."

Microsoft general counsel Brad Smith applauded the ruling in a statement posted after the news broke. "As a global company we’ve long recognized that if people around the world are to trust the technology they use, they need to have confidence that their personal information will be protected by the laws of their own country," Smith wrote. "Today’s decision means it is even more important for Congress and the executive branch to come together to modernize the law."