Magistrate Judge James C. Francis referred to the warrant as a "hybrid, - part search warrant and part subpoena" - and said it has long been law that the recipient of a subpoena must produce information in its possession regardless of where it is stored.

Francis added that if territorial restrictions on conventional warrants were extended to cyberspace, "the burden on the government would be substantial, and law enforcement efforts would be seriously impeded."

With conventional warrants, information can only be seized overseas according to the terms of a Mutual Legal Assistance Treaty between the countries.

Already, Microsoft said, foreign leaders are raising concerns about the ruling. Compliance with US search warrants may cause companies to violate data-protection laws in countries where the targeted data is stored, it added.

Microsoft said it has encountered "rising concerns among both current and potential customers overseas" and some customers have cited the ruling as they chose a foreign provider to store data.

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