Defense Secretary Pete Hegseth announced a two-week review to eliminate Chinese involvement in all DoD cloud services, emphasizing that no Chinese engineers will be allowed to access sensitive military systems going forward.

Concerns about the oversight model, which relied on U.S. escorts to supervise foreign engineers, have been raised, with doubts about their ability to effectively monitor for security threats or malicious code.

Cybersecurity experts warn that cost-cutting measures and lax oversight in critical systems can lead to security breaches, especially when foreign personnel are involved.

While there is no direct evidence of espionage by Microsoft’s Chinese staff, the potential for exploitation by foreign intelligence remains a major concern for U.S. security.

In response, Hegseth has ordered a rapid review of Pentagon systems to ensure similar outsourcing practices are not occurring elsewhere, aiming to mitigate national security risks.

This controversy comes amid escalating U.S.-China tensions over technology and cybersecurity, highlighting the challenge for American tech firms to balance global operations with national security obligations.

Former officials expressed shock and concern over the lack of awareness about this practice, highlighting the significant security risks involved in outsourcing sensitive government work to foreign personnel.

Senator Tom Cotton led an investigation into these practices, calling for a review of contractors using Chinese personnel and emphasizing the importance of protecting against cyber threats from China.

Microsoft has decided to ban Chinese engineers from working on U.S. Department of Defense cloud systems amid national security concerns, reversing previous practices that involved foreign personnel.

The investigation revealed that Microsoft had been using Chinese engineers monitored by U.S.-based 'digital escorts'—American employees with security clearances—who relayed commands but lacked the technical expertise to detect malicious activity.

This incident has sparked a broader debate about outsourcing critical government systems, with lawmakers pushing for stricter regulations to prevent foreign access and potential vulnerabilities.

The incident adds to a troubling history of security lapses at Microsoft, including a 2023 hack that compromised thousands of State Department emails, raising concerns about corporate security culture.