Microsoft Corp. announced that it has terminated a unit within Israel’s Defense Ministry’s access to certain cloud services after investigating allegations of mass surveillance of Palestinians using its Azure platform.
The decision was disclosed by Microsoft President Brad Smith in a blog post, following a review prompted by an August 6 report in The Guardian.
The report alleged that an Israeli Defense Forces intelligence unit was collecting and storing telephone calls of Palestinian civilians through the Azure cloud platform.
Azure serves as Microsoft’s primary cloud computing service, offering storage, compute infrastructure, and artificial intelligence capabilities.
According to The Guardian’s report—based on interviews with anonymous sources including Microsoft employees and Israeli officials—the intelligence unit had access to a “customised and segregated area” within the Azure cloud.
While Smith’s blog post did not confirm these specific details, he stated that Microsoft’s review of the Israeli military’s cloud platform usage had uncovered “evidence that supports elements of the Guardian’s reporting” concerning the IDF’s use of certain AI services and storage capacity in the Netherlands.
The company has now notified the Israeli Defense Ministry, which oversees the IDF, of its decision to terminate the unit’s access to some cloud services. Though Smith did not identify the specific unit, it is widely believed to be Unit 8200, an IDF intelligence division comparable to the U.S. National Security Agency.
Smith emphasized Microsoft’s position on civilian surveillance, stating: “We have applied this principle in every country around the world, and we have insisted on it repeatedly for more than two decades.”
Microsoft is not severing all ties with the IDF, and Smith noted the company would continue collaborating to “protect the cybersecurity of Israel” and other Middle Eastern nations.
Israel’s Defense Ministry declined to comment on Microsoft’s decision but previously responded to The Guardian’s original report by noting that its work with the company operates under “legally supervised agreements” and denied involvement in “the storage or processing of data.”
This isn’t the first report suggesting the IDF has utilised U.S. software products in its Gaza Strip operations against Hamas.
Previous reports sparked internal protests among Microsoft employees, resulting in at least five terminations. Last month, Microsoft confirmed it requested police intervention to remove employees who had “improperly entered” its Redmond, Washington headquarters to protest.
The company clarified it would not penalize employees merely expressing their views but would address anyone making threats.
Many protests were organized by No Tech For Apartheid, a group established in 2021 to pressure Silicon Valley companies to cut ties with the Israeli military. A related group, No Azure for Apartheid, has since emerged and led the recent headquarters incident.
In May, Microsoft fired Joe Lopez, a software engineer and group member, after he interrupted CEO Satya Nadella’s keynote at the company’s annual Build developer conference, shouting: “Satya, how about you show how Microsoft is killing Palestinians.”
Holger Mueller of Constellation Research Inc. called Microsoft’s action unprecedented, noting uncertainty about whether the decision stems from public relations, ethics, privacy concerns, or other factors.
“The decision raises a lot of questions about if it should be the responsibility of cloud providers to monitor how customers use their services, and which laws and rights should govern that,” Mueller said.
“The location of the data centers used is key as well, as most legislation is at a national level. It will be interesting to see how other cloud companies respond to this challenge, and it adds another dynamic to the already ongoing sovereign cloud debate in many territories.”
Rob Enderle, founder of the Enderle Group, suggested Microsoft faces significant pressure from multiple directions. “The pressure ramped up this week with speeches at the UN in support of Gaza and Palestine, and Microsoft has found itself between a rock and a hard place,” he said.
Enderle noted the difficult position for Microsoft as a publicly traded company measured by financial performance, with the Israeli military representing a particularly lucrative customer.
However, supporting that customer amid Gaza events carries risks. “There is a real danger that companies providing that support will face sanctions on top of boycotts,” Enderle said.
“So Microsoft and others are trying to do the minimum to avoid these adverse outcomes, but I expect that these minimums won’t be seen as enough,”
“This is not something that most tech companies are set up to deal with, and as a result, the outcomes for them misjudging their responses will end badly.” he said.
A No Azure for Apartheid spokesperson told the Wall Street Journal the group welcomed Microsoft’s “significant and unprecedented” decision but believes it falls short.
“Microsoft has only disabled a small subset of services to only one unit of the Israeli military,” the spokesperson said. “The vast majority of Microsoft’s contract with the Israeli military remains intact.”
The impact on IDF operations remains unclear, though The Guardian reported today that Unit 8200 plans to migrate some databases containing phone call information to Amazon Web Services, an alternative cloud service operated by Amazon.com Inc.
Matt Mahmoudi, an Amnesty International researcher who has investigated Israel’s use of cloud technology for monitoring Palestinians, also welcomed the decision.
“Microsoft’s conduct should serve as a wake-up call to other companies supplying cloud infrastructure, AI and surveillance products to Israel,” he said.
