When Edward Snowden leaked data about then-secret NSA programs and monitoring practices last year, he kicked off a serious headache for a number of American companies that do business overseas. Many of the biggest names in digital business, including Google, Facebook, Microsoft, and Yahoo claim to have lost business with international customers as a result and have frantically reassured their existing customers that no, the US is not (or can no longer) spy on their data. Those arguments took a huge whack last week when the Justice Department asserted in a brief that data stored on an American company’s servers must be accessible via warrant — regardless of where the server actually is. (In this case, the unidentified account holder is an Irish citizen and his data is stored on a server in the EU).

Pre-Snowden, this kind of dispute might have barely qualified as news, but corporations have found themselves in the hot seat over how data is shared with the government. The DOJ’s argument is simple: Microsoft is an American company governed by American law, and the DOJ investigators have secured a legal and appropriate warrant that targets the email address and inbox of a specific individual.

Microsoft, in contrast, is arguing that the United States should use its Mutual Legal Assistance Treaty (MLAT) to raise the issue with Ireland and coordinate with Irish law enforcement.

An administrative decision that could reshape US-EU business relations

If the appeals court continues to hold in favor of the US government, US corporations doing business in Europe could be in a world of hurt. The domestic discussion of the NSA’s behaviors has been liberally flavored with a dose of “But, see, we only spy on foreigners — not citizens of the good ol’ USA!” Outside our borders, these claims don’t play particularly well, and they don’t engender confidence.

There’s a practical problem at play here as well. Companies doing business in the EU are required to uphold EU privacy laws and restrictions on how information can be used or shared. Apple has gotten in trouble on several occasions for failure to inform EU customers of their warranty rights. Google was recently required to implement an EU-mandated “right to be forgotten” in its search results.

In short, the EU and its citizens take a dim view of the idea that American laws and ideals should apply to Europe just because we’re Americans. It puts Microsoft in between the ultimate rock and a hard place — if the company gives into US demands, it’ll be perceived as kowtowing to the same governmental departments responsible for the NSA’s excesses.

What’s disquieting about this case is that it revolves around a drug trafficking investigation, not a national security case or a time-sensitive terrorism plot. In its briefs, the Department of Justice argues that it’s under no legal obligation to raise issues with other countries under treaty law or to coordinate its investigations with the appropriate Irish officials. Microsoft’s argument (and some Irish officials have weighed in confirming it) is that in order to hand over data in accordance with Irish law, the request needs to flow through Irish channels.

It might seem like the kind of pedantic dispute that only lawyers relish, but how this gets resolved could have real significance for companies that do business in the European Union. The US position essentially argues that it can obviate local statutes that govern the rights of EU citizens just because those citizens are doing business with an American company. If a federal judge confirms that reading of the statute, Google, Microsoft, and Amazon could lose big business as a result.

The Washington Post has a substantial discussion on this topic, which seems to concur with the idea that this is about saving time (from the government’s perspective) versus saving face and business (from the corporate perspective). It notes that going through the MLAT system would take a great deal longer than simply getting the data from Microsoft — possibly several months.

Will the Snowden case change how justices read these statutes and how Europeans react to them? There’s reason to think it could.