Microsoft Stock Falls as Company Plans Review of Israeli Operations

Microsoft (MSFT) shares slipped after announcing plans to review its Israeli operations. The review will focus on the use of Microsoft's Azure cloud technology by the Israeli Defense Forces, which has raised concerns among employees and activists. This move follows a previous investigation in May that found Microsoft's technology was used by the Israeli Ministry of Defense.

Microsoft (MSFT) shares experienced a decline on July 2, 2025, following the tech giant's announcement of an independent review into its operations in Israel. The review will focus on the use of Microsoft's Azure cloud technology by the Israeli Defense Forces (IDF), which has sparked concerns among employees and activists.

The move comes in the wake of a previous investigation in May that found Microsoft's technology was used by the Israeli Ministry of Defense. The latest review is an attempt to address allegations that the IDF has been using Azure to store data from phone calls obtained through mass surveillance operations in Gaza and the West Bank, a practice that would violate Microsoft's terms of service [1].

Microsoft has retained the law firm Covington & Burling, alongside an unnamed technical consultancy, to conduct the review. The company has stated that it will publish the findings once the review is complete. The review comes amidst growing pressure from Microsoft employees and human rights groups who have expressed concern over the potential misuse of Microsoft's cloud and AI technologies in military operations in Gaza [2].

The latest protests by Microsoft employees, including an occupation of the company's east campus in Redmond, Washington, have further highlighted the issue. Employees have demanded that Microsoft divest from Israel, citing the use of its software by the Israeli military to carry out operations in Gaza and enable the surveillance of Palestinians [3].

Microsoft has maintained that it has not found evidence that its technology has been used to harm civilians. However, the company has acknowledged that the recent allegations presented by The Guardian merit a full and urgent review. Microsoft has stressed that militaries typically rely on proprietary software or tools developed by defense contractors for surveillance or targeting operations, not commercial platforms like Azure [2].

The review is expected to provide clarity on the allegations and could potentially impact Microsoft's operations in Israel and its reputation among investors and stakeholders. As the review progresses, investors will be closely monitoring the situation for any developments that could affect Microsoft's financial performance.

References:
[1] https://www.khq.com/news/microsoft-launches-review-into-israels-use-of-azure-cloud-services/article_43af1c94-640f-436d-b590-28d257b0bd65.html
[2] https://www.calcalistech.com/ctechnews/article/bkk6lgytel
[3] https://www.theguardian.com/technology/2025/aug/19/microsoft-workers-protest-washington-israel