Microsoft Undertakes Governance Overhaul Post Nayara Debacle

Big tech giant Microsoft has said that it will “advocate” for the withdrawal of any foreign government orders, mandating its service suspension, through legal channels.

In a blog post, regional vice president of corporate external and legal affairs at Microsoft Asia, Mike Yeh, said that the company “may” also seek injunctive relief to preserve service continuity despite foreign government “orders”.

“Microsoft will use best efforts to inform customers of any foreign government orders mandating service suspension, advocate for withdrawal of any such order through legal channels and may seek injunctive relief to preserve service continuity. We also commit to collaborating in good faith with customers to maintain access to their data and minimise business disruption,” read the blog. 

The move follows Microsoft, in July, suspending cloud services to Indian oil refining major Nayara after interpreting and acting on EU sanctions. The company later challenged the suspension before the Delhi High Court. However, before the hearing could begin, Microsoft resumed its services to the company. 

The new “governance reforms” appear to be Microsoft’s bid to placate Indian public sector companies and critical infrastructure clients following the Nayara clamp down. Many critics had then flagged that the standoff exposed a critical strategic deficiency in India’s reliance on foreign-owned cloud companies.

Meanwhile, in the blog post, Yeh also said that the big tech company has updated its risk-based compliance framework, including validation checkpoints, escalation pathways and cross-functional oversight, to ensure that its services are resilient and compliance actions are “proportionate, context-sensitive, and legally robust”.

Beyond technical and legal measures, Microsoft is also broadening its engagement with India’s public sector. In the blog, the company also announced the setting up of a new Customer Council, chaired by Microsoft India president Puneet Chandok.

The council will be focussed on continuous dialogue with “public sector and critical infrastructure leaders” to address requirements in areas such as digital sovereignty, cybersecurity, and best practices.

Alongside, the big tech said that it continues to scale its offerings in the country as per local requirements and strengthened policy protocols. 

“Microsoft continues to enhance its secure cloud infrastructure and support… India’s sovereignty requirements with Microsoft Cloud for Sovereignty and Hybrid AI partnerships with local service providers. Our strengthened privacy protocols are aligned with India’s regulatory standards, while partnering with government and public sector entities to bolster national cyber resilience,” added Yeh. 

At the heart of this matter is the major row that erupted between Nayara and Microsoft in July this year. The big tech giant blocked all its services to the Indian oil refining major to comply with EU sanctions, which claimed that profits earned by Nayara contributed to Russia’s “war campaign” against Ukraine. 

For context, Russian state-owned energy company Rosneft owns 49.13% stake in Nayara.

The aftermath saw many questioning the over-dependence of Indian conglomerates on US-based cloud giants for cloud computing and data services.