Microsoft initially lost in the Southern District of New York, with the judge stating that the nature of the Stored Communication Act warrant, as passed in 1986, was not subject to territorial restrictions.

The Supreme Court, following agreement from both the government and Microsoft, determined the passage of the CLOUD Act and a new warrant for the data filed under it made the case moot and vacated the Second Circuit's decision.

As part of the investigation into a drug-trafficking case in December 2013, a United States magistrate judge in the United States District Court for the Southern District of New York issued a warrant under the Stored Communications Act of 1986 (SCA) requiring Microsoft to produce all emails and information associated with an account they hosted.

[2] The magistrate judge considered that Microsoft had control of the material outside the United States, and thus would be able to comply with the subpoena-like nature of the SCA warrant.

[6] In the appeal to the Second Circuit, the three-judge panel unanimously overturned the lower court's ruling in July 2016, and invalided the government's warrant.

The court relied heavily on the United States Supreme Court's 2010 ruling in Morrison v. National Australia Bank that the "longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States" applies in all cases.

Circuit Judge Jose Cabranes, who wrote in dissent, wrote that the held decision "has substantially burdened the government's legitimate law enforcement efforts; created a roadmap for the facilitation of criminal activity; and impeded programs to protect the national security of the United States and its allies", and called on a higher court or the U.S. Congress to rectify the outdated language of the SCA.

[15] Separately from its appeal, the U.S. Government has had at least one other ruling in its favor, and specially against the decision of the Second Circuit Court, for similar extraterritorial requests under the SCA.

In February 2017, federal magistrate judge, presiding over a district court within the Third Circuit, ruled that Google must comply with a government warrant to turn over data from foreign servers.

to deny law enforcement officials with requested information stored on servers outside the United States, hampering numerous criminal investigations.

It also requested that the Court vacate the case and remand it back to the Second Circuit, where the matter could then be rendered moot due to the passage of the CLOUD Act.