Yesterday there was mild uproar when Business Insider revealed that the Dropbox file-hosting service had updated its terms and conditions with a ‘worrying clause’.

As set forth in our privacy policy, and in compliance with United States law, Dropbox cooperates with United States law enforcement when it receives valid legal process, which may require Dropbox to provide the contents of your private Dropbox. In these cases, Dropbox will remove Dropbox’s encryption from the files before providing them to law enforcement.

While some were concerned that this announcement effectively trashed Dropbox’s earlier claims that they utilize encryption methods that not even their employees can circumvent, others were concerned about the wider implications.

Will companies always hand over your private data to the authorities if they are ordered to by a court? The short answer, and one you should always presume to be correct when using a US-based company, is a resounding ‘YES’.

One only has to look how Sony subpoened YouTube, Twitter and PayPal in the recently settled Geohot/PS3 cases to know that if you use a US company, your privacy – whether you are directly involved in an action or not – can be breached in an instant.

In short, all US-companies will cave in, pretty quickly, to both civil and criminal threats. It’s the law.