Microsoft has suspended access to some of its artificial intelligence and cloud computing services for a unit of the Israeli military after finding its technology was being used in mass surveillance of Palestinians.
The move followed separate investigations by the Associated Press and The Guardian earlier this year, which revealed that the Israeli Ministry of Defense had deployed Microsoft’s Azure platform to support its operations in Gaza and the West Bank.
Brad Smith, Microsoft’s vice chair and president, confirmed in a blog post on Thursday that the company had taken enforcement measures to ensure compliance with its terms of service.
According to an AP investigation in February, the Israeli military’s use of Microsoft services surged following the 7 October 2023 Hamas attack. Internal company data reviewed by AP showed heavy consumption of cloud storage and AI-driven translation tools.
That data, according to the report, was combined with Israel’s in-house systems to process intercepted phone calls and text messages, before being used to assist in targeting airstrikes.
AP also reported that multiple Azure accounts were tied to Unit 8200, Israel’s elite cyber-intelligence wing responsible for clandestine surveillance and signal collection.
In May, Microsoft admitted it had supplied AI and cloud services to the Israeli military during the war and supported efforts to locate hostages. But at that time the company insisted it found “no evidence” its products were directly used to harm civilians.
Fresh scrutiny came in August when The Guardian, working with +972 Magazine and Local Call, reported that the commander of Unit 8200 met Microsoft chairman and CEO Satya Nadella in 2021.
The report alleged the unit went on to build a large-scale surveillance system powered by Microsoft tools, capable of sweeping, translating and analysing millions of Palestinian phone calls daily.
It also claimed that data from the system was being stored on Microsoft’s European cloud servers.
In response, Microsoft launched a second probe led by an external law firm. While that review remains ongoing, Smith said preliminary findings confirmed breaches of the company’s service agreements, prompting Thursday’s action. He did not identify which Israeli unit had lost access.
The company refused to answer AP’s follow-up questions on whether Unit 8200 was directly involved or how Microsoft planned to prevent the Israeli military from shifting operations to other Azure accounts under its control.
An Israeli security official, speaking anonymously under military protocol, dismissed the move as operationally insignificant, saying it would cause “no damage” to the capabilities of the Israel Defense Forces.
For Microsoft employees critical of the company’s role in the Gaza war, however, the decision marked a turning point.
Hossam Nasr, one of more than a dozen workers fired or detained after protesting the firm’s contracts with Israel, described it as a “significant and unprecedented win.” Still, he argued it was insufficient.
“Microsoft has only disabled a small subset of services to only one unit in the Israeli military,” said Nasr, now an organiser with the campaign group No Azure for Apartheid. “The vast majority of Microsoft’s contract with the Israeli military remains intact.”
