Microsoft has suspended portions of its cloud services for Israel’s Defense Ministry after uncovering evidence that they were used to monitor civilians in Gaza, intensifying tensions over one of the company’s most disputed contracts.
The action came after an internal review that validated parts of a story claiming Israel had stored data from millions of Palestinian phone calls on Microsoft’s Azure cloud. A person familiar with the situation said the company is continuing its probe, while Microsoft executives emphasized their dedication to privacy safeguards.
“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 initial report in August sparked demonstrations across Microsoft’s corporate campus, with staff accusing management of facilitating Israeli surveillance. Some employees disrupted conferences, displayed Palestinian flags and banners in Redmond, Washington, and entered Smith’s office in protest. The company later dismissed five workers and closed an internal channel used for discussing contracts with governments.
Microsoft has long provided Israel with digital tools, including Azure data storage, networking and analytics, along with email and file management systems for the military. It was reported that Israel used those services to support military operations in Gaza and the West Bank.
Smith said the company’s findings focused on a Netherlands-based data center that housed information from Israel’s Defense Ministry. While Microsoft initially denied its services had been used to harm people, it reopened its review amid renewed criticism and hired a law firm to lead the investigation.
The company acknowledged it had verified aspects of the reporting but declined to release details. Microsoft policy forbids its technology from being used to enable mass civilian surveillance, Smith said.
Israel’s Defense Ministry declined to comment, while the prime minister’s office and the Israeli military did not reply to requests for comment.
The dispute has highlighted the tension between multinational tech firms and their work with governments during conflicts. Microsoft’s clampdown reflects an attempt to juggle lucrative state contracts with employee unrest and reputational exposure, especially as protests over Gaza have spread through U.S. companies and campuses.
The matter also underscores wider scrutiny of Big Tech’s involvement in war zones. For Microsoft, the consequences have already altered its corporate routines: questions at company town halls must now be presubmitted, and security has been increased 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 inquiry still underway, Microsoft has left open the prospect of additional measures.
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