Microsoft Corp. will offer European customers the option of storing their cloud data in Germany, the company said Wednesday.  This move is aimed at addressing concerns about the security of U.S. data centers following reports of surveillance by intelligence agencies.

Data that customers enter into Internet-based Microsoft software for office and business applications will be stored in two data centers owned by Deutsche Telekom AG, Germany’s largest telecommunications group.

 Microsoft will only be granted access to this data if it is given permission by the customer or Deutsche Telekom’s T-Systems subsidiary, which operates the data centers. If T-Systems grants access, Microsoft would only proceed under supervision.

The German data centers will “offer customers choice and trust in how their data is handled and where it is stored,” said Microsoft Chief Executive Satya Nadella.

The announcement came weeks after the European Court of Justice struck down an agreement between the U.S. and European Union that had allowed the transfer of Europeans’ personal data to the U.S.

 The “Safe Harbor” pact violated the privacy rights of Europeans by exposing them to allegedly indiscriminate surveillance by the U.S. government, according to the court. German data protection authorities said after the ruling they wouldn’t allow any new data transfers to the U.S.

The ruling by the EU’s highest court has upended technology plans for many trans-Atlantic companies. “It undermines all businesses,” said U.S. Commerce Secretary Penny Pritzker during a recent visit to Germany.

Microsoft said 83% of German businesses expect their cloud provider to operate data centers in Germany, according to a study by German business group Bitkom.

The new service will be available to customers in the EU and some neighboring countries from the second half of next year. Microsoft applications such as Office 365, Azure and Dynamics CRM Online will be delivered from data centers in Frankfurt and Magdeburg.

Since former National Security Agency contractor Edward Snowden accused U.S. authorities of carrying out widespread surveillance, Deutsche Telekom has rolled out a number of products aimed at protecting users from espionage and eavesdropping, including encrypted email, secure smartphones and German data centers.

Microsoft, challenged by mistrust of privacy-seeking Europeans, has said the U.S. shouldn’t be able to touch data which the company stores for customers overseas. A U.S. judge ordered Microsoft last year to turn over customer’s email account details that it stored in Ireland for a narcotics probe. Microsoft has appealed the decision.

Other countries are also pressing U.S. technology titans to keep their citizens’ data on local soil. A new law in Russia requires companies such as Facebook Inc. and Twitter Inc. to store and process data about Russian users within the country’s borders.