Amidst Xbox boycotts and media pressure, Microsoft reportedly restructures Israeli office after internal investigation into ethical violations

But will it sever ties completely?

Microsoft's investigation into the ethical conduct of its Israeli office, and its work with the Israeli Ministry of Defense - particularly in relation to storing user data on Microsoft's servers - has resulted in the departure of the general manager there and several other managers. This is according to news publication Globes, which also heard that for the time being, Microsoft's rudderless Israeli office will be led by Microsoft France.

Microsoft's investigation is a result of a report aired on The Guardian last year about the use of Microsoft's cloud technology and artificial intelligence services by the Israeli military during the most intensive bombardments of Gaza. People Make Games also published a detailed video on the issue later that year, reporting from a Microsoft data center in Holland alleged to have been storing Ministry of Defence-intercepted audio recordings, and many other forms of data, from millions of Palestinian people.

It's a situation that's given rise to calls to boycott Microsoft - and in particular subsidiaries like Xbox - until the matter is resolved or at least addressed. Earlier this year, an indie studio returned Microsoft game-funding money because of the company's involvement with Israel, and other studios have removed their games from sale on Microsoft platforms as well.

Globes reports that Microsoft decided to "unilaterally terminate" its usage agreement with IDF intelligence Unit 8020 in September last year because of the surfacing reports, and the subsequent protests that erupted because of them.

At the time, Microsoft president Brad Smith wrote (as per Globes' report): "Microsoft is not a government or a state - we are a private company - and like any company we decide what products and services to offer our customers.

"We decided to investigate the Guardian's claims about the IDF's use of Azure to store recordings of phone calls obtained through extensive and mass surveillance in Gaza and the West Bank, based on two principles: protecting privacy and preventing mass surveillance of citizens. We have applied this principle in every country in the world and have insisted on it repeatedly for more than two decades."

But pressure on the company has continued to mount. The result is this latest development: a team sent from Microsoft headquarters to Israel several weeks ago to investigate.

Microsoft is said to have been particularly concerned that Israel's Ministry of Defense was using its services in non-transparent ways that violated its terms of use. Alon Haimovich, the then-general manager of Microsoft Israel, was brought in to answer for this. The result? Haimovich left the company after four years last week.

The Globes report goes on to point out that Microsoft and Israel's Ministry of Defense are due to renew their contract at the end of the year, and that apparently both parties are interested in continuing it "albeit on a smaller scale". Meanwhile, the Israeli Ministry of Defense is apparently eyeing Amazon's and Google's cloud storage as an alternative.

Meanwhile, Microsoft is trying to relaunch its Xbox brand, appointing an unexpected new leader in Asha Sharma, who'll take center stage during the annual summer game festivities next month as she tries to convince the world that Xbox, as a console, is a contender again. Neither Sharma nor the gaming segment's previous leadership have commented on calls for people to boycott Xbox because of Microsoft's ties to Israel.

Microsoft declined to comment on Globes' report, but we are separately seeking comment from the company.