Microsoft

Microsoft Corporation is a software company headquartered at One Microsoft Way in Redmond, Washington.¹ It was co-founded in 1975 by Bill Gates and Paul Allen. Gates served as its chief executive until 2000 and as chairman until February 2014.² Steve Ballmer, who joined the company in 1980, was appointed chief executive in January 2000 and held the post in the fiscal 2013 annual report; Nadella succeeded him in February 2014.³ Its operating systems, productivity software, cloud platform and government computing products, along with its acquisitions and its investments in artificial intelligence, appear in several areas of the record: the surveillance programs disclosed from 2013, a 1999 controversy over a cryptographic key labeled for the National Security Agency, the Pentagon cloud and Army headset contracts, the OpenAI partnership, and the network around Jeffrey Epstein.

Leadership and the Gates Years

Gates gave up the chief executive post in 2000, the same year the Gates Foundation was started. He stepped down from the company's board in March 2020, saying he was leaving to devote more time to philanthropy.² Satya Nadella has been chief executive since February 2014 and was appointed chairman in June 2021, according to the company's annual report for fiscal 2024.¹

In May 2021 Microsoft disclosed that its board had examined a 2019 complaint about Gates. The company said it "received a concern in the latter half of 2019 that Bill Gates sought to initiate an intimate relationship with a company employee in the year 2000," and that "A committee of the Board reviewed the concern, aided by an outside law firm, to conduct a thorough investigation."² Microsoft said the inquiry reached no conclusion because Gates had stepped down before it was completed.² Dow Jones had reported earlier that directors found his involvement with the employee inappropriate and decided he should leave the board, citing unnamed people familiar with the matter. A spokeswoman for Gates said "There was an affair almost 20 years ago which ended amicably," and that his "decision to transition off the board was in no way related to this matter."² Microsoft said it had put processes for investigating allegations in place since 2000 and had overhauled them to make them stronger.²

In the same coverage, Bloomberg wrote that several reports had said Melinda French Gates raised concerns about his dealings with Jeffrey Epstein, and recalled the New York Times report of 2019 that Gates had met Epstein several times and once stayed late at his New York townhouse. A Gates spokeswoman said the "characterization of his meetings with Epstein and others about philanthropy is inaccurate." A person familiar with the matter told Bloomberg that Gates's dealings with Epstein "weren't a part of the scope of the Microsoft investigation," but that "it was discussed by some board members."² The Epstein meetings are set out below.

Craig Mundie joined Microsoft in 1992 and was named Chief Research and Strategy Officer in June 2006; he co-wrote the 2024 book Genesis with Henry Kissinger and Eric Schmidt.⁴⁵ The executive roster of July 2011 lists Nadella as President, Server and Tools, Steven Sinofsky as President of the Windows and Windows Live Division, and Brad Smith as Senior Vice President and General Counsel.⁵

Intelligence Collection: PRISM and Outlook.com

On July 11, 2013 The Guardian published NSA documents supplied by Edward Snowden showing that Microsoft had worked with the agency on the company's own consumer services. The paper wrote that "Microsoft has collaborated closely with US intelligence services to allow users' communications to be intercepted, including helping the National Security Agency to circumvent the company's own encryption, according to top-secret documents obtained by the Guardian."⁶

The documents describe a sequence of cooperation. A newsletter entry said that "For Prism collection against Hotmail, Live, and Outlook.com emails will be unaffected because Prism collects this data prior to encryption." The NSA had become concerned about the interception of encrypted chats on the Outlook.com portal from the moment Microsoft began testing it in July 2012, and within five months "Microsoft and the FBI had come up with a solution that allowed the NSA to circumvent encryption on Outlook.com chats."⁶ A further entry dated April 8, 2013 described the company working "for many months" with the Federal Bureau of Investigation to allow Prism access to the SkyDrive storage service without separate authorization. Another entry recorded an FBI unit working with Microsoft on an Outlook.com feature that creates email aliases, which "may affect our tasking processes."⁶

The Guardian had reported on June 6, 2013, from an NSA slide presentation, that the agency's Prism program drew on the systems of nine internet companies, and that Microsoft "was the first, with collection beginning in December 2007," followed by Yahoo in 2008, Google, Facebook and PalTalk in 2009, YouTube in 2010, Skype and AOL in 2011 and Apple.⁷ Microsoft's statement to the paper in July said that it provides customer data "only in response to government demands and we only ever comply with orders for requests about specific accounts or identifiers," and that its compliance team rejects demands it believes are invalid.⁶ The Office of the Director of National Intelligence and the NSA issued a joint statement which said that "The US operates its programs under a strict oversight regime, with careful monitoring by the courts, Congress and the Director of National Intelligence."⁶

Skype was the other point of contact. The Guardian reported that work on integrating Skype into PRISM began in November 2010, that the company was served with a directive to comply signed by the attorney general on February 4, 2011, and that collection began on February 6, 2011.⁶ Microsoft announced on May 10, 2011 that it would acquire Skype for $8.5 billion in cash.⁵ Slate also listed a June 2011 Microsoft patent for "legal intercept" technology designed for services like Skype, which the timeline described as able to "silently copy" communications.⁸ Slate placed the Skype collection in the months before that announcement and recorded that a Microsoft transparency report published in March 2013 said the company had handed over the content of no Skype communications in 2012.⁸ Slate quoted an emailed Microsoft statement that the company "does not provide any government with blanket or direct access to SkyDrive, Outlook.com, Skype or any Microsoft product."⁸ The same timeline reported that the New York Times had described an internal Skype program called "Project Chess," begun in 2008, to explore how Skype calls could be made readily available to intelligence agencies.⁸ The Guardian amended its article to record Microsoft's statement that it did not make any changes to Skype to allow PRISM collection on or around July 2012.⁶

The NSAKEY Controversy

In September 1999 Andrew Fernandes, chief scientist at Cryptonym Corp., reported a second key in the CryptoAPI cryptography architecture of Windows, labeled "_NSAKEY." He had found it in the copy of the ADVAPI.DLL library shipped with Windows NT 4.0 Service Pack 5, whose debugging symbols had not been removed.⁹¹⁰ Fernandes said that "In the data security profession, those three initials only mean one thing: National Security Agency," and argued that the NSA held the second key. Fernandes said the key would let the agency load services onto users' machines without their authorization, an option he thought the NSA would more likely use against a corporation than an individual.⁹ The report came days after Microsoft had dealt with a breach of its Hotmail e-mail service.⁹

Microsoft denied this. Its spokesman, Dan Leach, said "These reports are completely false," and the company said the label meant only that the cryptography architecture met the NSA's standards for export.⁹ Leach also said that "The key does not allow any other party to start or stop cryptographic services on anyone's computers."⁹ Fernandes posted a "fix" for the key on his website, and a demonstration utility that replaced it.⁹¹¹

Early that month the NTBugtraq editor Russ Cooper posted a message that Robert Hettinga forwarded to the Cypherpunks list on September 3, 1999. Cooper wrote that "I'm told the NSA insisted there had to be a backup," and offered a theory that a backup key would let Microsoft rotate a compromised primary key. He also reported Fernandes's finding that replacing the second key let a party add a cryptographic provider signed with its own key, and quoted Fernandes as saying "Export controll is effectively dead for Windows."¹¹ Cooper's account of the backup was secondhand. Ian Goldberg of the University of California, Berkeley told CNN that the discovery "highly suggests" that the NSA had a key that could be used on any Windows system.⁹ The Berkeley security researcher David Wagner called the Cryptonym finding "a small deal at least."⁹ Alec Muffett, a security consultant for Sun Microsystems professional services group, said that many international companies had decided not to trust Microsoft and described the situation as "a bit of a conundrum from a political strategy point of view."⁹

Defense and Intelligence Contracts

Microsoft announced a new classified cloud, Azure Government Top Secret, on December 7, 2020. Its blog post, by Corporate Vice President Tom Keane, said "We have recently completed the buildout of new Azure Government Top Secret regions, and we are working with the US Government on accreditation," and that the regions were "designed to provide the same capabilities as Azure (commercial), Azure Government" and Azure Government Secret.¹² In August 2021 Microsoft said its Top Secret regions had authorization to operate and were generally available for national security workloads.¹³

The Joint Enterprise Defense Infrastructure (JEDI) solicitation, HQ0034-18-R-0077, was issued by the Department of Defense on July 26, 2018, and on October 25, 2019 the department announced that it had awarded the contract (HQ0034-20-D-0001) to Microsoft over Amazon Web Services.¹⁴ The Boston Globe reported a ceiling of $10 billion over ten years.¹⁵ Amazon Web Services sued in the United States Court of Federal Claims on November 22, 2019 (No. 19-1796C), with Microsoft as intervenor-defendant. Counsel listed for Microsoft in the February 2020 opinion included Kathryn Ruemmler, the former White House Counsel who later appears in the Epstein records.¹⁴ On February 13, 2020 Judge Patricia Campbell-Smith granted Amazon's motion for a preliminary injunction against contract performance and ordered Amazon to post $42 million in security; the opinion recorded the department's estimate of $5 million to $7 million in monthly cost from delay.¹⁴ The department took voluntary corrective action on remand and confirmed its award to Microsoft on September 2, 2020. In an opinion of April 29, 2021 the court denied the government's and Microsoft's motions to dismiss the count of Amazon's amended complaint titled "Bias, Bad Faith, Improper Influence, and/or Conflict of Interest," which alleged that President Donald Trump had made clear to the department's highest officials his desire that Amazon not receive the contract; the court ruled on waiver grounds only and recited the allegation as Amazon's.¹⁶ Oracle had also challenged the procurement.¹⁷

On July 6, 2021 the department canceled the JEDI solicitation and initiated termination procedures. Its statement said the contract "no longer meets its needs" because of "evolving requirements, increased cloud conversancy, and industry advances," and announced a multi-vendor Joint Warfighter Cloud Capability (JWCC), with proposals to be sought from Microsoft and Amazon Web Services, "as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department's requirements."¹⁸

The Army's headset program started with a 2018 prototype award. The Army's PEO Soldier release of March 31, 2021 stated that on March 26, 2021 the Army "awarded Microsoft Corporation a fixed price production agreement to manufacture the Integrated Visual Augmentation System (IVAS)," using Middle Tier of Acquisition and Other Transaction authorities and a "non-traditional defense contractor."¹⁹ The program was reported at up to $21.88 billion. In April 2022 the Department of Defense Inspector General reported that the Army had not defined minimum user acceptance levels and warned of "wasting up to $21.88 billion in taxpayer funds to field a system that Soldiers may not want to use or use as intended"; the PEO Soldier spokesman replied that the Army had defined prototype metrics.²⁰ In February 2025 Microsoft and Anduril Industries announced that Anduril would take over production, hardware and software development and delivery schedules, pending Department of Defense approval. Microsoft said it would shift its focus to cloud and AI technologies, which would serve as the foundation for IVAS as a situational awareness platform, and that Azure would remain the preferred cloud service for related workloads.²¹ Breaking Defense reported in April 2025 that the Army had approved the transfer of the contract to Anduril.²² Anduril, which Palmer Luckey co-founded, is the company that took over the program.²¹

OpenAI and the AI Cluster

OpenAI and Microsoft announced on July 22, 2019 that Microsoft was "investing $1 billion in OpenAI to support us building artificial general intelligence (AGI) with widely distributed economic benefits." The announcement said that "Microsoft will become our exclusive cloud provider" and that the two companies would jointly develop new Azure supercomputing technologies. OpenAI said it intended to license some pre-AGI technologies, with Microsoft as its preferred commercialization partner. The reason given was cost: "The most obvious way to cover costs is to build a product, but that would mean changing our focus."²³ The company's annual report for fiscal 2024 describes OpenAI as a long-term partner whose models Microsoft deploys across its consumer and enterprise products, and notes that Azure powers all of OpenAI's workloads as its exclusive cloud provider. The same report records that Microsoft announced a third phase of the partnership in January 2023.¹

The partnership was restructured on October 28, 2025. OpenAI stated that "Following the recapitalization, Microsoft holds an investment in OpenAI Group PBC valued at approximately $135 billion, representing roughly 27 percent on an as-converted diluted basis."²⁴ The same statement said that OpenAI had contracted to purchase an incremental $250 billion of Azure services, that Microsoft would no longer have a right of first refusal to be OpenAI's compute provider, that Microsoft's intellectual property rights to models and products were extended through 2032 and now included post-AGI models, and that any AGI declaration would be verified by an independent expert panel.²⁴

The November 2023 board crisis at OpenAI turned on the company's relationship with Microsoft. After the board removed Sam Altman as chief executive on November 17, 2023, Greg Brockman quit and roughly 700 employees signed a letter threatening to follow Altman to Microsoft. On November 20 Satya Nadella announced that Altman and Brockman would lead a new advanced-research lab inside Microsoft.²⁵ Mira Murati, named interim chief executive that week, was among the signatories.²⁵ Ilya Sutskever signed the letter and posted that he "deeply regret[ted]" his part in the board's actions.²⁶ Altman returned on November 29, 2023 with a new initial board on which Bret Taylor served as chair. Taylor wrote to staff that the board would include "a non-voting observer for Microsoft."²⁷

The partnership is also part of the litigation brought by Elon Musk against OpenAI. Musk sued in 2024 and later amended the complaint to name Microsoft as a defendant, alleging that OpenAI had become a closed-source de facto subsidiary of Microsoft.²⁸ A federal jury dismissed all of Musk's claims against Altman in May 2026.²⁹

Other figures in the AI sector are also tied to Microsoft through their work. Dario Amodei and a group of colleagues left OpenAI in December 2020 after a faction around Amodei came into conflict with OpenAI's leadership over, among other things, the 2019 Microsoft investment and the capped-profit restructuring.³⁰ Scale AI, whose founder Alexandr Wang testified before the House Armed Services Committee on July 18, 2023, named Microsoft among its technology partners, with Meta and OpenAI, and described its work for the Department of Defense's Chief Digital and Artificial Intelligence Office, the Army and the Air Force.³¹ Ben Buchanan, then at the Johns Hopkins University School of Advanced International Studies, defended the AI diffusion rule at a university symposium on April 7, 2025 and said that Microsoft and NVIDIA were lobbying the Trump administration to reverse it.³² Asana disclosed in its 2026 proxy statement that Andrew Lindsay, a director since 2021, is a corporate vice president at Microsoft.³³

The Epstein Network

The New York Times reported in October 2019 that Gates had met Jeffrey Epstein many times from 2011, and on at least one occasion stayed at Epstein's New York townhouse late into the night.³⁴ The Wall Street Journal reported on May 21, 2023 that Epstein had written to Gates in 2017 in terms that implied knowledge of Gates's past relationship with a Russian bridge player, after Gates declined to join a charitable fund Epstein was trying to build with JPMorgan Chase. A Gates spokeswoman told the paper that "Mr. Gates met with Epstein solely for philanthropic purposes."³⁵ On June 10, 2026 Gates gave a closed-door interview to the House Oversight Committee. Fortune reported that he said "I should never have met with Epstein in the first place."³⁶

Other Microsoft names appear in the Epstein records released by the Department of Justice. On June 7, 2013 a message from David Stern to Epstein read "PA is in Silicon Valley on 25 & 26 June. Anyone you want him to see ?" Epstein then wrote to Steven Sinofsky, "PA is prince andrew."³⁷ Sinofsky replied with an offer to arrange meetings for Prince Andrew: "Do you want me to get him any meetings? Can I help with any folks? A dinner?"³⁸ In the same reply he wrote that "I think he would love spending an hour hearing startup guys pitch their products." Microsoft's executive roster of July 2011 listed Sinofsky as President of the Windows and Windows Live Division, and Visual Studio Magazine reported that his departure was announced on November 12, 2012.⁵³⁹

A December 23, 2015 set of board minutes for Reporty Homeland Security, an Israeli company whose directors included Amir Elichai and Ehud Barak, recorded a demonstration of the Reporty system and a discussion of the company's "current business relationships and partners such as Haifa Municipality, Microsoft, Taldor as well as integrators." The Department of Justice released the minutes among Epstein's records.⁴⁰

Kathryn Ruemmler, whom Epstein telephoned in 2014 about her interest in Gates and his foundation, is listed among Microsoft's counsel in the JEDI litigation described above.¹⁴

Acquisitions and Investments

Skype had been co-founded by Jaan Tallinn, and eBay bought the company in September 2005 for about 2.6 billion dollars, a transaction that converted Tallinn's founding stake into a fortune.⁴¹ Microsoft bought Skype outright in 2011 for $8.5 billion in cash, which the company's annual report described as an acquisition that would "extend Skype's brand and reach of its network platform."⁵

Microsoft acquired LinkedIn in 2016 for approximately $26.2 billion, according to the company's fiscal 2016 annual report.⁴² LinkedIn had been founded in 2002 by Reid Hoffman, who had served as executive vice president of external relations at PayPal and belonged to the PayPal Mafia cohort.⁴³ Microsoft acquired Yammer in 2012 for $1.1 billion in cash, according to its fiscal 2013 annual report.³ Yammer was founded by David Sacks, who had been chief operating officer of PayPal.⁴⁴

The Horowitz Family Foundation, tied to Ben Horowitz, filed tax returns reporting gifts made in shares, including 63,758 shares of Microsoft worth 7,128,028 dollars for the year ended June 2019.⁴⁵ According to a 2025 Forbes report, Good Ventures, the vehicle of Cari Tuna and Dustin Moskovitz, held Microsoft among its largest holdings, alongside Impossible Foods, its first impact investment, and the chipmakers TSMC, ASML and Nvidia.⁴⁶

United States v. Microsoft

The Department of Justice filed suit against Microsoft in July 1994, charging it with unlawfully maintaining a monopoly in the operating system market through licensing terms. The trial court issued conclusions of law on April 3, 2000, finding Microsoft liable on the tying and monopoly maintenance counts, and later a final judgment with a remedial order. Mediation had failed after nearly four months of settlement talks, and the court had found Microsoft liable on all but one count.⁴⁷

On June 28, 2001 the United States Court of Appeals for the District of Columbia Circuit ruled in a per curiam opinion. The court said it would "affirm in part and reverse in part the District Court's judgment that Microsoft violated 2 of the Sherman Act by employing anticompetitive means to maintain a monopoly in the operating system market." It reversed the finding that Microsoft had illegally attempted to monopolize the internet browser market and remanded the tying finding for further proceedings.⁴⁷

The appellate court also vacated the final judgment on remedies. It found "impermissible ex parte contacts by holding secret interviews with members of the media" by the trial judge, along with offensive public comments about Microsoft officials outside the courtroom, and it required that the case be assigned to a different trial judge on remand. The court said, "Although we find no evidence of actual bias," the trial judge's actions had seriously tainted the proceedings.⁴⁷

David Boies, who later chaired Boies Schiller Flexner from 1997 to 2024, served as Special Trial Counsel for the Department of Justice in the case from 1998 to 2000, according to the firm's biography.⁴⁸

Cryptography and Early Digital Cash

In the mid-1990s the eCash system of David Chaum and DigiCash was seeking larger distribution partners. Negotiations with several of them fell through, among them a Visa investment and a Microsoft proposal to bundle eCash with Windows 95, over terms that Chaum and Bill Gates reportedly could not agree. DigiCash filed for bankruptcy in November 1998.⁴⁹⁵⁰

The cryptographer Wei Dai, who released the Crypto++ library in 1995, worked for a period in Microsoft's cryptography research group, where he co-proposed the VMAC authentication algorithm and held cryptography patents.⁵¹⁵²

Child Safety and Hash Matching

Microsoft donated its PhotoDNA image-matching technology to the National Center for Missing and Exploited Children on December 15, 2009. The company's general counsel, Brad Smith, said that "PhotoDNA is a powerful technology that will help combat online child pornography," and that "We are very pleased to donate PhotoDNA to the National Center for Missing & Exploited Children to support the battle against this horrific crime."⁵³ The technology creates "a unique signature for a digital photograph, like a fingerprint," against which other copies of the same image can be matched. The company and the center issued a joint call to consumers, policy makers and online services to help stamp out child pornography.⁵³

In United States v. Ackerman, decided August 5, 2016, the United States Court of Appeals for the Tenth Circuit held that NCMEC was a "governmental entity or agent" for Fourth Amendment purposes. The opinion lists Microsoft among the amici supporting the government, with Dropbox, Facebook, Google, Pinterest, Snapchat and Twitter.⁵⁴ In June 2016 Defense One reported that Microsoft had provided funding for the hash-matching software developed for the Counter Extremism Project.⁵⁵ Microsoft has been a member of the Internet Watch Foundation since 2001, in the tier of members contributing over 90,000 pounds. Discord joined in November 2023 in a lower tier.⁵⁶

Funding, Think Tanks and Corporate Networks

The Center for a New American Security published a supporters list for October 1, 2024 to September 30, 2025 that placed Microsoft in the 50,000 to 99,999 dollar tier, alongside NVIDIA and Scale AI.⁵⁷ The Foundation for American Innovation lists Microsoft among its corporate supporters and event sponsors, alongside OpenAI, Anthropic and Meta.⁵⁸

In Saudi Arabia, Echelon describes its Technologies division as "led by Omar Saleh," who "spent the last 20 years at Microsoft, successfully running its enterprise business in the Kingdom."⁵⁹ Abdulrahman Alfozan, an engineer later arrested in connection with the bugging of an OpenAI executive conference room, is described on his LinkedIn profile as having interned at Microsoft, SAP in Berlin and Akamai Technologies, according to the San Francisco Standard.⁶⁰ The Riyadh venture firm RAED Ventures describes its co-founder Nashef, who also co-founded Sadara Ventures, as having begun as a software engineer at Microsoft in 1994.⁶¹