Microsoft just cut off Israel's Ministry of Defense from key cloud services after discovering the military was using Azure to store surveillance data on Palestinian phone calls. The unprecedented move, announced Thursday, affects Azure cloud storage and AI services following an internal investigation that began in August. This marks the first time the tech giant has publicly severed ties with a government client over surveillance concerns.
Microsoft just drew a line in the sand that could reshape how Big Tech handles government surveillance contracts. The company announced Thursday it's cutting off Israel's Ministry of Defense from Azure cloud storage and AI services after an internal probe found the military was using Microsoft's infrastructure to store surveillance data on Palestinian phone calls.
The decision follows a two-month investigation that began after The Guardian reported in August that Unit 8200, Israel's elite military intelligence operation, was housing phone call data obtained through Palestinian surveillance in Gaza and the West Bank on Azure servers. "We do not provide technology to facilitate mass surveillance of civilians," Microsoft Vice Chair Brad Smith wrote in a company blog post announcing the termination.
Microsoft informed Israeli officials of the decision last week, according to The Guardian's latest reporting. The move affects multiple Azure subscriptions and certain AI services, though the company declined to specify exactly which services remain under review. Smith acknowledged that Microsoft only discovered the surveillance use through media reporting, since customer privacy protections prevent the company from accessing client data directly.
This represents Microsoft's first public termination of government services over surveillance violations, setting a significant precedent for how cloud providers police their platforms. The decision comes as tech companies face increasing scrutiny over their role in government surveillance operations worldwide. Amazon faced similar pressure over AWS contracts with Immigration and Customs Enforcement, while Google employees successfully protested the company's involvement in Project Maven, a Pentagon AI initiative.
The Israeli Ministry of Defense contract termination caps a tumultuous year for Microsoft regarding its Middle East operations. Employee activism has intensified since the conflict began, with protesters at the company's 50th anniversary celebration in April. In August, several employees at Smith's office, forcing a campus lockdown.
