META Meta Platforms Inc

The Obama administration is working on a series of deals that would, for the first time, allow foreign governments to serve U.S. technology companies with warrants for email searches and wiretaps—a hotly debated issue in global debates over privacy, security, crime and terrorism. The administration is preparing to announce its first such agreement with the United Kingdom.

Word of the plans came one day after a federal appeals court ruled that Justice Department warrants couldn't be used to search data held overseas by Microsoft Corp., dealing the agency a major legal defeat.

Brad Wiegmann, a senior official at the agency, discussed the efforts during a public discussion Friday.

The court's decision in favor of Microsoft could prove to be a major barrier to the Obama administration's proposed new rules to share data with other nations in criminal and terrorism probes, which would be sharply at odds with the ruling. It might also lead companies that provide services over the internet to reconfigure their networks to route customer data away from the U.S., putting the data out of the reach of federal investigators if the administration's plan fails.

The Justice Department has indicated it is considering appealing the ruling to the Supreme Court.

Meanwhile, agency officials are pressing ahead with their own plan for cross-border data searches.

Under the proposed deals described by Mr. Wiegmann, foreign investigators would be able to serve a warrant directly on a U.S. firm to see a suspect's stored emails or intercept their messages in real time, as long as the surveillance didn't involve U.S. citizens or residents.

"They wouldn't be going to the U.S. government, they'd be going directly to the providers," said Mr. Wiegmann. Any such arrangement would require that Congress pass new legislation, and lawmakers have been slow to update electronic privacy laws.

U.S. officials are preparing to announce such an agreement with U.K. authorities. The deal would need to be approved by the legislatures of both countries before it could take effect.

That agreement could become a template for similar deals with other countries, officials said.

Mr. Wiegmann said the U.S. would strike such deals only with nations that have clear civil liberties protections to ensure that the search orders aren't abused.

"These agreements will not be for everyone. There will be countries that don't meet the standards," he said.

Greg Nojeim, a privacy advocate at the Center for Democracy and Technology, criticized the plan. He said it would be "swapping out the U.S. law for foreign law" and argued that U.K. search warrants have less stringent judicial protections than U.S. law.

British diplomat Kevin Adams disputed that, saying the proposal calls for careful judicial scrutiny of such warrants. Privacy concerns over creating new legal authorities are overblown, he added.

"What is really unprecedented is that law enforcement is not able to access the data they need," Mr. Adams said. The ability to monitor a suspect's communications in real time "is really an absolutely vital tool to protect the public."

While Thursday's court decision represented a victory for Microsoft, which strives to keep data physically nearby its customers, it may not be a positive development for all internet companies, said University of Kentucky law professor Andrew Woods. Yahoo, Facebook and Google operate more centralized systems. They didn't file briefs in support of Microsoft's position in the case, he noted.

Mr. Woods warned that increased localization of data could have the unintended consequence of encouraging governments to become more intrusive.

"If you erect barriers needlessly to states getting data in which they have a legitimate interest, you make this problem worse," he said. "You increase the pressure that states feel to introduce backdoors into encryption."

Microsoft President and Chief Legal Officer Brad Smith said the company shares concerns about the "unintended consequences" of excessive data localization requirements.

"But rather than worry about the problem, we should simply solve it" through legislation, Mr. Smith said. Microsoft supports the proposed International Communications Privacy Act. That legislation would, among other provisions, create a framework for law enforcement to obtain data from U.S. citizens, regardless of where the person or data was located.

Thursday's ruling could lead some Microsoft rivals that offer email, document storage, and other data storage services, but which haven't designed systems to store data locally, to alter their networks, said Michael Overly, a technology lawyer at Foley & Lardner in Los Angeles.

Google, for example, stores user data across data centers around the world, with attention on efficiency and security rather than where the data is physically stored. A given email message, for instance, may be stored in several data centers far from the user's location, and an attachment to the message could be stored in several other data centers. The locations of the message, the attachment and copies of the files may change from day to day.

"[Internet companies] themselves can't tell where the data is minute from minute because it's moving dynamically," Mr. Overly said.

The ruling could encourage tech companies to redesign their systems so that the data, as it courses through networks, never hits America servers.

A person familiar with Google's networks said that such a move wouldn't be easy for the company.

Jack Nicas contributed to this article.

Write to Devlin Barrett at devlin.barrett@wsj.com and Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

July 15, 2016 18:25 ET (22:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.