Microsoft announced Thursday that, following a report in the British newspaper The Guardian based on information from the left-wing Israeli websites +972 Magazine and Local Call, it determined that Unit 8200 used Microsoft's Azure platform to store and analyze millions of phone conversations of Palestinians in Gaza and in Judea and Samaria. After an internal review, Microsoft ruled that this violated its terms of service, stressing that it "does not provide technology enabling mass surveillance of civilians."
The IDF and the Defense Ministry have long worked with Microsoft, not only in cloud computing but also in IT systems, enterprise software, cybersecurity, and development tools. Microsoft operates major research and development centers in Israel, some of which are tied to cloud and AI solutions, making the partnership strategically significant both for Israel's tech sector and for the IDF, particularly Unit 8200.
In late 2021, then-Unit 8200 commander Maj. Gen. Yossi Sariel met with Microsoft CEO Satya Nadella at the company's headquarters in Seattle. The meeting aimed to advance cooperation on transferring vast amounts of sensitive intelligence, including recorded calls, to Microsoft's servers in Europe, mainly in the Netherlands and Ireland. Azure's immense storage capacity enabled the unit to handle data at a scale not possible with existing military servers.
What does the decision mean in practice?
Unit 8200 has lost access to Microsoft's large-scale data processing capabilities, including AI-powered analysis tools.
Even so, Microsoft remains a key supplier to the IDF. The restrictions apply primarily to cloud and AI services that were used for broad surveillance.
Since the start of the current war, the IDF has increased its reliance on cloud and AI technologies to process enormous amounts of data: phone intercepts, video from drones, satellite imagery, and footage from surveillance cameras. Azure's advantage was not only storage but also real-time processing and advanced models for pattern recognition, target identification, and large-scale communications analysis.
Shifting to another cloud provider, reportedly Amazon Web Services, will require time and technical effort, but analysts say it is unlikely to paralyze Unit 8200's intelligence-gathering capabilities. In the short term, however, there could be a drop in the efficiency of intelligence analysis, which is used to prepare strikes in Gaza.
This marks the first time an American technology corporation has cut off services to the IDF since the Gaza fighting began. Microsoft's decision followed pressure from employees, investors, and human rights groups, signaling a growing sensitivity among US tech firms over the military use of their platforms.
The fact that sensitive intelligence data was stored on Microsoft's servers in Europe, especially in the Netherlands, further complicated matters and raised legal questions, both with the European Union under its GDPR privacy regulations and with other partners.
The larger question is whether other companies, such as Amazon or Google, will follow suit. If so, Israel's defense establishment may face serious challenges relying on Western technology corporations, which are subject to political pressure, public opinion, and US law.
The "Spartan model"
Israel is expected to find technological alternatives to Microsoft's services. But the company's move highlights the extent of the IDF's reliance on foreign tech giants and international cloud infrastructure for intelligence and combat operations. It also bolsters Prime Minister Benjamin Netanyahu's recent argument, made in a widely cited speech earlier this month, that Israel must develop self-sufficiency in security-related industries.
