Inquiry Into Microsoft Software Leak Raises Questions About Privacy Protections (NASDAQ:MSFT)

microsoftFor months, the big technology companies have denied knowing anything about the government spying on people who use their Internet services. However, a recently filed legal case has highlighted the amount of power these companies have to snoop on their customers at will.

The case was filed against a former Microsoft employee by Microsoft. The former employee was accused of stealing company trade secrets in the form of software code for the Windows operating system. The employee then reportedly leaked the software to a blogger.

The company is basing its case against the former employee from information gleaned from reading the emails and instant messages of the blogger on his Microsoft-operated Hotmail and message accounts. This allowed the company to figure out who revealed the information.

Microsoft’s actions appear to have been legal and within the scope of its own policies. However, privacy lawyers say that the reading of the private online accounts of a customer without a court order is highly unusual. It also raises concerns about its protections for customer data.

Microsoft’s actions appeared to be within the boundaries of the Electronic Communications Privacy Act. The Electronic Communications Privacy Act allows service providers to read and disclose customers’ communications if necessary to protect the rights or property of the service provider.

Jennifer Granick, an attorney and director of civil liberties at the Stanford Center for Internet and Society called the move by Microsoft “stupid.” She also said that the case should raise concerns among bloggers and journalists about communicating with their sources using Microsoft Internet services. Ms. Granick said, “What blogger will use that service now?”

Microsoft seemed to acknowledge the unusual nature of its actions while claiming that it had done nothing wrong. However, there has been a brewing outcry over its methods of investigating the former employee that the company has been forced to acknowledge.

In a statement, John E. Frank, a Microsoft vice president and deputy general counsel, said that the company would take several new steps to reassure customers that their communications will be private. He also said that the company would state the number of searches of customer accounts that it conducted itself as part of a broader transparency report published periodically in compliance with government and court orders.