Microsoft Halts Services to Israeli Defense Unit Amid Surveillance Allegations

Microsoft has suspended certain services to a unit within Israel’s Ministry of Defense, following an internal investigation prompted by a recent Guardian report alleging the Israeli military was involved in mass surveillance of Palestinians.

In an internal email sent to employees on Thursday, Microsoft President and Vice Chair Brad Smith confirmed that the company had uncovered evidence supporting “elements” of the report, which accused Unit 8200, an elite Israeli intelligence unit, of operating a phone surveillance system targeting Palestinians.

“While our review is ongoing, we found evidence substantiating elements of the Guardian’s reporting,” Smith wrote. “This includes information regarding the Israeli Ministry of Defense’s usage of Microsoft Azure cloud storage capacity in the Netherlands, as well as artificial intelligence services.”

The company declined to specify which exact services were discontinued, but sources familiar with the matter confirmed that Microsoft informed Israeli defense officials of its decision to suspend cloud storage and AI subscriptions used by the agency.

The move marks a rare instance of a major U.S. tech firm taking direct action against a military customer over ethical concerns tied to surveillance and human rights.

The decision follows growing internal pressure at Microsoft. Over the past several months, employees had staged protests urging the company to cut ties with entities involved in Israel’s military operations in Gaza. At least five employees were terminated after participating in demonstrations at the company’s Redmond headquarters.

“Protecting privacy is not only a moral obligation but a commercial imperative,” Smith wrote, emphasizing that Microsoft does not access customer data during such audits, in line with its policies.

He also credited The Guardian for its investigative journalism, which reportedly triggered Microsoft’s internal probe.

Microsoft’s action comes just one week after a UN-appointed commission accused Israel of committing genocide during its ongoing war in Gaza, an allegation vehemently denied by Israeli authorities. The mounting scrutiny has intensified global pressure on Western tech companies supplying tools that may be used in military surveillance or combat operations.

Unit 8200, often described as Israel’s equivalent to the U.S. National Security Agency (NSA), is known for its sophisticated signals intelligence capabilities. The unit is central to Israel’s cyber operations, and has previously been linked to high-profile surveillance technologies.

According to The Guardian, intelligence sources claim that Unit 8200 is now seeking to migrate its data infrastructure to Amazon Web Services (AWS), the dominant player in the global cloud computing market.

Microsoft’s decision adds fuel to an intensifying debate about the role of Big Tech in military operations and surveillance. Employee activism, once rare in the industry, has become more visible, as workers demand transparency and ethical guidelines around government and defense contracts.

For Microsoft, the move signals a notable shift, not only in terms of compliance and privacy policy, but in corporate accountability amid geopolitical conflicts.