Microsoft Cuts Cloud Services to Israel’s Unit 8200 Following Surveillance Report

by Emmitt Barry, with reporting from Worthy News Jerusalem Bureau Staff

(Worthy News) – Microsoft announced Thursday that it has stopped providing certain cloud and AI services to a division of the Israeli Ministry of Defense, after an internal review confirmed elements of a report alleging that the IDF’s elite Unit 8200 used its Azure platform to store and analyze millions of Palestinian phone calls.

The decision followed an August investigation by The Guardian, based on material from Israeli left-wing outlets +972 Magazine and Local Call, which claimed that Unit 8200 had built a surveillance system on Microsoft’s infrastructure.

Microsoft President Brad Smith confirmed the move in an email to employees, stating: “While our review is ongoing, we have found evidence that supports elements of The Guardian’s reporting. This evidence includes information relating to IMOD consumption of Azure storage capacity in the Netherlands and the use of AI services.”

The tech giant said the use of its services violated company policies, emphasizing it “does not provide technology enabling mass surveillance of civilians.”

Strategic implications for Israel

Unit 8200, Israel’s main signals intelligence branch, has relied heavily on Microsoft’s cloud and AI tools to process vast amounts of data–including intercepted phone calls, drone footage, and satellite imagery. Azure’s advantage lay not only in storage but also in advanced AI-driven analytics for pattern recognition, target identification, and large-scale communications analysis.

The suspension means the IDF has lost access to Microsoft’s large-scale data processing, forcing it to shift to alternative providers. Reports indicate Unit 8200 may migrate its systems to Amazon Web Services (AWS), though this will take time and could temporarily reduce the efficiency of intelligence operations used in Gaza.

Despite the restrictions, Microsoft remains a significant supplier to Israel, providing IT systems, enterprise software, cybersecurity, and development tools. The ban applies primarily to cloud and AI services tied to surveillance.

Pressure from inside and outside

Microsoft’s move comes after weeks of pressure from employees and human rights groups protesting Israel’s use of company technology during the war in Gaza. The firm recently dismissed five employees who demonstrated at its Redmond headquarters.

The decision also follows a recent United Nations commission accusing Israel of committing genocide in Gaza, adding to international scrutiny.

Legal and political challenges

The revelation that sensitive intelligence data was stored on Microsoft servers in Europe–particularly in the Netherlands and Ireland–raises further questions under European Union GDPR privacy regulations.

Analysts warn that if other tech giants such as Amazon or Google follow Microsoft’s lead, Israel could face severe challenges in maintaining its intelligence and defense operations, given its reliance on Western technology companies subject to political pressure and international law.

Israel’s response

The development underscores Prime Minister Benjamin Netanyahu’s recent call for Israel to build greater self-sufficiency in defense technology, warning against overreliance on foreign corporations.

For now, Microsoft’s suspension marks the first time a U.S. tech giant has cut off services to the IDF during the ongoing Gaza conflict, signaling a growing sensitivity in Silicon Valley to how their platforms are used in wartime.

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