Microsoft has disabled portions of its cloud services for Israel’s Defense Ministry after finding evidence it was used to surveil civilians in Gaza, escalating tensions over one of the company’s most controversial contracts, The Wall Street Journal reported.
The move followed an internal probe that confirmed elements of a Guardian report alleging Israel stored data from millions of Palestinian phone calls through Microsoft’s Azure cloud. A person familiar with the matter said the company is continuing its investigation, while Microsoft officials stressed their commitment to privacy protections.
“As employees, we all have a shared interest in privacy protection, given the business value it creates by ensuring our customers can rely on our services with rock solid trust,” Microsoft President Brad Smith said in a blog post Thursday. He added that the inquiry was guided by the company’s “longstanding protection of privacy as a fundamental right.”
The Guardian report in August triggered protests across Microsoft’s corporate campus, with workers accusing leadership of enabling Israeli surveillance. Some employees disrupted conferences, hung Palestinian flags and banners in Redmond, Washington, and entered Smith’s office in protest. The company later fired five employees and shut down an internal channel used for debating contracts with governments.
Microsoft has long supplied Israel with digital tools, including Azure data storage, networking and analytics, as well as email and file management systems for the military. The Guardian reported Israel used the services to support military operations in Gaza and the West Bank.
Smith said the company’s findings centered on a Netherlands-based data center that stored information from Israel’s Defense Ministry. While Microsoft initially denied its services were used to harm people, it reopened its review after renewed criticism, hiring law firm Covington & Burling to conduct the investigation.
The company acknowledged it had confirmed parts of The Guardian’s reporting but withheld specifics. Microsoft policy prohibits its technology from being used to facilitate mass civilian surveillance, Smith said.
Israel’s Defense Ministry declined to comment, while the prime minister’s office and the Israeli military did not respond to requests for comment.
The controversy has underscored the clash between global technology firms and their work with governments during conflicts. Microsoft’s crackdown reflects an effort to balance lucrative state contracts with employee unrest and reputational risks, particularly as protests over Gaza have spread across U.S. corporations and campuses.
The issue also reflects the broader scrutiny of Big Tech’s role in war zones. For Microsoft, the fallout has already reshaped its corporate culture: questions at company town halls must now be presubmitted, and security has been heightened at public events after an engineer interrupted Chief Executive Satya Nadella in May.
“Satya, how about you show how Microsoft is killing Palestinians,” engineer Joe Lopez shouted at Nadella before being removed and later fired.
With the investigation still ongoing, Microsoft has left open the possibility of further action.
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