Microsoft Israel has been placed under the temporary management of Microsoft France following the departure of its general manager, Alon Haimovich, and several senior governance officials. An internal investigation found that the Israeli subsidiary used Azure cloud services in ways that violated the company’s code of ethics, particularly in connection with contracts involving Israel’s Ministry of Defense.

The probe was launched after mounting internal and external pressure over how Microsoft’s cloud technology was being used. Investigators discovered usage patterns that breached company terms and raised concerns about a lack of full transparency with global leadership. Some of the disputed activity involved defense units routing data through European servers, increasing regulatory exposure for the company.

The controversy follows earlier reporting that Israel’s military intelligence unit had used Azure to store large volumes of intercepted Palestinian phone calls. Microsoft has stated that it does not provide technology for mass surveillance of civilians and terminated that unit’s access in September 2025. The company and the Ministry of Defense are expected to renegotiate their contract later this year, though on a potentially reduced scale as more workloads shift to other providers with infrastructure inside Israel.