In late August, A US district court ordered Microsoft to hand over the emails and personal information of a customer currently undergoing investigation even though the data is stored offshore in Dublin, Ireland. And at that time, Microsoft said that it would challenge this ruling and now the company has been found to be in contempt of court.
Here's the deal, Microsoft was ordered to overturn email that is stored in its Dublin data center. Microsoft argues that since the data is not on US soil, the US government does not have the authority to make such a request. But, since Microsoft is based in the US, the government feels that Microsoft should have to turn over the data. In August, a judge ruled that Microsoft had to turn over the data but so far, the company has refused to do so.
Microsoft has said that they will appeal the ruling and the courts agree that they should be allowed to appeal. But, since Microsoft is still refusing to turn the data over, they have been found in contempt of court (basically, in violation of the orders given when they lost the case). And, since the courts agree an appeal is in order, nothing is really going to happen. According to Naked Security, this is what the courts said:
Microsoft and the US government have agreed that the company will be held in contempt for its refusal to hand over email stored in the cloud at its Dublin data center but won't be fined or punished, giving it a chance to appeal a court order to cough up a customer's communications
At the end of the day, this does not impact Microsoft's business line but its still a pretty big deal, even if there is no punishment. Defying court orders is not done lightly and it is good to see that Microsoft is willing to fight, all the way to the end, to protect customer data.