Microsoft Israel Country General Manager Alon Haimovich departed after an investigation into the company's work with the Ministryof Defense. Several governance managers also left their positions. Microsoft's global management sent an investigation team to examine activities, particularly the sales department's work with defense units, amid concerns about code of ethics violations and non-transparent practices.

The investigation uncovered usage patterns that violated Microsoft's terms of service and conduct that damaged trust between the Israeli branch and global management. Microsoft terminated its agreement with IDF Unit 8200 in September 2025 following a Guardian report about surveillance activities. The company now faces pressure from pro-Palestinian organizations and a potential shareholder vote by Norway's sovereign wealth fund regarding human rights risks.

Microsoft France has taken direct control of Microsoft Israel, replacing the Dubai regional office. The company occupies a precarious position among cloud providers since it hasn't secured a special agreement with the Israeli government like Amazon and Google did with the Nimbus tender. The Ministry of Defense contract comes up for renewal at year-end, with both sides wanting to continue the relationship, though on reduced terms.