EU governments have been trying in recent months to get social platforms to crack down on rising online racism following the refugee crisis and terror attacks, with some even threatening action against the companies.
The lawsuit argues that the government is violating the U.S. Constitution by preventing Microsoft from notifying thousands of customers about government requests for their emails and other documents.
The company's endorsement of the Privacy Shield comes amidst criticism of it by privacy groups for failing to address concerns about U.S. surveillance practices.
For Satya Nadella, using 'the power of human language' to communicate with machines will be as profound as the development of the Internet and the use of touchscreens on mobile devices.