Microsoft signed $125M deal with Israel’s defense ministry during Gaza war

Microsoft ↗ 0.66% signed a software licensing contract worth approximately $125.4 million with Israel's defense ministry in 2024, according to Israeli government budget documents first analyzed by Middle East Eye, which published its findings on September 4.middleeasteye

The deal, valued at roughly 464 million shekels, appears in Israel's annual budget-execution report for 2024, published by the finance ministry's accountant general in March 2025. The entry was buried within a lengthy list of procurement commitments and only surfaced after close analysis of the Hebrew-language document by MEE. As of December 31, 2024, none of the contract's value had been paid, and the engagement is set to run until 2027.thecurrent+1

A Possible Renewal

Former Microsoft employees who have tracked the company's Israeli contracts told MEE the newly identified agreement could be a renewal of a $133 million, three-year contract Microsoft signed with the Israeli military in 2021, first reported by the Associated Press. Both deals cover similar timeframes and values. The AP also found that Microsoft classified the Israeli military as an "S500" client, a designation reserved for its highest-priority customers, and identified at least 635 individual subscriptions held by the military under code names including "8200," referring to Israel's elite cyberwarfare unit.apnews+1

The Israeli budget report does not identify the 2024 deal as a renewal, nor does it specify which bodies within the defense ministry would use the software.middleeasteye

Cloud Controversy and Partial Cutoff

The licensing agreement predates a separate controversy over Microsoft's cloud services. In August 2025, the Guardian, working with +972 Magazine and Local Call, reported that Unit 8200 had used Microsoft's Azure cloud platform to store recordings of millions of Palestinian phone calls, with sources saying the database helped shape military operations. Microsoft President Brad Smith subsequently announced the company had "ceased and disabled a set of services to a unit within the Israel Ministry of Defense," though a leaked internal email indicated the cutoff affected only a narrow subset of services.aljazeera+2

The budget document records the licensing engagement as a fixed multi-year commitment for software — distinct from the consumption-based cloud and AI services Microsoft later restricted.middleeasteye

Continued Scrutiny

Abdo Mohamed, a former Microsoft data scientist fired after organizing a vigil for Palestinians killed in Gaza and now an organizer with the campaign group No Azure for Apartheid, called the contract "yet more crystal-clear evidence of how Microsoft and its executives continue to enable, power, accelerate and profit from Israel's ongoing crimes against Palestinians". Microsoft has fired at least nine employees over protests related to its Israel business since October 2024.thecurrent+1

Microsoft told MEE it "had nothing to add from our side".middleeasteye