Microsoft has stopped allowing engineers based in China to provide support to U.S. military cloud systems after the Pentagon raised concerns about foreign access to critical infrastructure.
The change was made public on Friday following a detailed report by ProPublica that revealed how Department of Defense cloud services were still being handled—at least partially—by engineers located inside China.
The company admitted the change came in direct response to questions about why these foreign engineers were involved in U.S. defense work in the first place. Frank Shaw, Microsoft’s chief communications officer, said on X:
“In response to concerns raised earlier this week about US-supervised foreign engineers, Microsoft has made changes to our support for US Government customers to assure that no China-based engineering teams are providing technical assistance for DoD Government cloud and related services.”
ProPublica report exposes foreign oversight of U.S. military cloud
The backlash started days earlier when ProPublica exposed how Microsoft’s Azure engineers in China were helping manage parts of the Pentagon’s cloud system, with American “digital escorts” overseeing the work.
But the problem? These U.S.-based escorts often had less technical skill than the foreign engineers they were supposed to supervise. The report raised serious concerns about how this setup could open the door for cyberattacks from Beijing.
Pete Hegseth, the Secretary of Defense under Trump’s administration, said on Friday that the entire arrangement was unacceptable. “This is obviously unacceptable, especially in today’s digital threat environment,” Hegseth said in a video posted to X.
He described the entire system as outdated, saying, “It’s a legacy system created over a decade ago, during the Obama administration.” Hegseth also confirmed that the Department of Defense would begin a full internal review to identify similar activity across other systems.
Microsoft’s decision affects its Azure cloud division, which analysts estimate now brings in more than 25% of its total revenue. That puts it ahead of Google Cloud in market size, though still behind Amazon Web Services.
Microsoft noted in its latest earnings that over half of its $70 billion first-quarter revenue came from U.S.-based clients, with government contracts playing a huge role.
The company had previously won a $10 billion cloud defense contract from the Pentagon in 2019. But that contract was canceled in 2021 after a legal dispute. A year later, in 2022, Microsoft was awarded part of a $9 billion joint cloud deal alongside Amazon, Google, and Oracle.
Before the ProPublica investigation, Microsoft had insisted that all of its staff and contractors followed the rules set by the U.S. government. But public scrutiny forced a quick policy reversal.
Frank, speaking again on behalf of the company, said, “We remain committed to providing the most secure services possible to the US government, including working with our national security partners to evaluate and adjust our security protocols as needed.”
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