Microsoft Israel has been placed under the management of Microsoft France, after the company announced the departure of…

Microsoft Israel’s general manager, Alon Haimovich, departed the company following an internal investigation that found the subsidiary used Azure cloud services in violation of Microsoft’s ethical guidelines. The probe, triggered by scrutiny over cloud contracts with Israel’s Ministry of Defense, uncovered usage patterns lacking transparency and violating terms of service. Microsoft has since placed the Israeli office under temporary management by Microsoft France, signaling the severity of the fallout. The controversy stems from earlier revelations by *The Guardian* and +972 Magazine in August 2025, which exposed Unit 8200—Israel’s elite military intelligence agency—using Azure to store millions of intercepted Palestinian phone calls from Gaza and the West Bank. Microsoft terminated Unit 8200’s access in September 2025, but the investigation revealed additional Ministry of Defense units had also misused Azure, with some data routed through European servers, increasing legal risks under GDPR. Microsoft faces unique challenges compared to competitors Amazon and Google, which won Israel’s 2021 Nimbus government cloud contract and built local data centers, keeping defense data within Israel’s jurisdiction. Microsoft’s lack of such infrastructure left its Azure services vulnerable to regulatory scrutiny, as ministry data was stored on European servers. Haimovich, who joined Microsoft in 2019 and expanded its Israeli operations into one of its fastest-growing markets, did not address the controversy in his farewell note. The timing is critical, as Microsoft and Israel’s Ministry of Defense are set to renew their contract later this year, though reports suggest the relationship will scale down, with much defense workload already shifted to Amazon and Google’s Israeli data centers.