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WASHINGTON — The U.S. Supreme Court said Monday it will hear a legal showdown between the federal government and Microsoft over the privacy of customer data stored outside the United States.

The justices agreed to decide whether Microsoft can be compelled to turn over e-mails stored on its servers in Dublin, Ireland. Federal prosecutors served a search warrant on the company's Redmond, Washington, headquarters, seeking the contents of an MSN.com account they said was used to conduct drug trafficking.

Microsoft sued to block the order, and a lower federal court ruled for the company. The Justice Department then asked the Supreme Court to take up the case.

Brad Smith, Microsoft's CEO and chief legal officer, said customer privacy is at issue.

"If U.S. law enforcement can obtain the e-mails of foreigners stored outside the United States, what's to stop the government of another country from getting your e-mails even though they are located in the United States?" Smith asked. "We believe that people's privacy rights should be protected by the laws of their own countries, and we believe that information stored in the cloud should have the same protections as paper stored in your desk."

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The company stores e-mails from its MSN and Hotmail domains on a network of 1 million servers at more than 100 data centers in 40 countries. A key issue in the case is where the search occurs — at Redmond, where company employees could easily call up the data? Or at the place where the customer content is actually stored?

If the answer is overseas, the company maintains, that's beyond the reach of a federal law governing access to stored data.

The Justice Department urged the Supreme Court to take the case, arguing that a ruling for Microsoft would cause "immediate, grave, and ongoing harm to public safety, national security, and the enforcement of our laws" and undercut the ability to investigate terrorism, child pornography, and fraud.

Justice Department lawyer Jeffrey Wall said Microsoft could easily retrieve the information "domestically with the click of a computer mouse."

Mark Rasch, a computer security expert and former Justice Department prosecutor, called the dispute "a very big case. It raises the largely unresolved issue of where things occur when they happen in cyberspace. We have a real world that has borders and national interests and a virtual world that doesn't respect them."

A ruling against Microsoft, he said, would discourage users outside the U.S. from using American internet companies for fear that their data, no matter where it was stored, would not lie beyond the reach of the federal government.

The Information Technology and Innovation Foundation, a science and technology policy group, agreed. But the group's president, Daniel Castro, said if Microsoft wins, foreign governments might try to force companies to store data inside their borders "to make it impossible for US officials to execute a search warrant."

Congress, he said, should revise the federal law at issue.

The court will hear the case early next year and issue a decision by June.