Microsoft has dismissed the head of its Israeli subsidiary and several senior managers following an internal investigation into allegations that its cloud infrastructure was used to surveil Palestinians in Gaza and the occupied West Bank, marking one of the most serious accountability crises to hit Big Tech in years.
Alon Haimovich, who served as Microsoft’s general manager in Israel for four years, has been removed from his role and is set to leave the company at the end of the month.
Until a replacement is appointed, Microsoft Israel will operate under the management of Microsoft France.
The scandal stems from reporting by The Guardian and +972 Magazine, which revealed that Israeli intelligence agencies were using Microsoft servers to run a mass surveillance operation targeting Palestinian communications.
According to the Guardian's investigation, the Israeli military secretly stored a vast database of Palestinians' phone calls on Microsoft's servers in Europe.
The arrangement was finalised in 2021 during a meeting at Microsoft’s headquarters in Redmond between CEO Satya Nadella and then-Unit 8200 commander Yossi Sariel.
Following October 7, 2023, Unit 8200 significantly expanded its use of commercial cloud infrastructure.
By the time the Guardian published its findings, Microsoft's servers were being used to process recordings of millions of phone calls made daily by Palestinians.
Microsoft President Brad Smith later said Microsoft’s internal review had confirmed parts of The Guardian’s reporting, including details about the Israeli defence ministry’s use of Azure storage servers in the Netherlands and its access to AI services.
Microsoft added that it had disabled certain cloud storage and AI services for a unit within the Israeli defence ministry.
How the pressure built
The scale of what was built on Microsoft's infrastructure is staggering.
As of July 2025, more than 11,500 terabytes of Israeli military data, equivalent to roughly 200 million hours of audio, were stored in Azure data centres in the Netherlands and Ireland.
The system, operational since 2022, was capable of storing and processing recordings of approximately one million calls per hour made by Palestinians.
This was not a passive storage arrangement.
Internal documents and interviews indicate that Microsoft employees worked closely with Israeli military contractors to build a custom security architecture for the project, with some sources describing daily collaboration between the parties.
The result was a segregated Azure environment designed specifically to house what the Israeli military classified as "sensitive workloads".
According to three Unit 8200 sources cited in the report, the cloud-based platform was used to prepare deadly air strikes and to shape military operations across Gaza and the occupied West Bank.
It also underpins a suite of AI-driven targeting tools developed under former Unit 8200 commander Yossi Sariel, including systems linked to catastrophic civilian casualties.
Israel's controversial AI-targeting tools, Gospel and Lavender, both linked to Unit 8200, were among the algorithms reportedly refined using data processed through this infrastructure.
Dissent existed within Microsoft but went nowhere. Some employees raised ethical concerns about the use of Azure for military surveillance and about complicity in war crimes.
Those who voiced objections were ignored or dismissed. It was only when those concerns moved from internal channels to public organising that the company was forced to respond.
The decision to cut off Unit 8200's access to some of its technology was a direct concession secured by the "No Azure for Apartheid" campaign from within Microsoft, where tech workers orchestrated petitions, disruptions, and direct actions culminating in sit-ins at executive offices.
Legal exposure is also concentrated. A Microsoft investigative team began work last month amid concerns that the Israeli subsidiary was exposing the company to legal liability in Europe, because the Azure servers used by the Israeli government to store surveillance data were based there.
Microsoft's internal review found management failures and a lack of transparency that damaged trust between Microsoft headquarters and its Israeli branch.
