The changes to contactual terms will apply globally and to all its commercial customers -- whether public or private sector entity, or large or small business, it said today.
The new contractual provisions will be offered to all public sector and enterprise customers at the beginning of 2020, it adds.
In October Europe's data protection supervisor warned that preliminary results of an investigation into contractual terms for Microsoft's cloud services had raised serious concerns about compliance with EU data protection rules and the role of the tech giant as a data processor for EU institutions.
Writing on its EU Policy blog, Julie Brill, Microsoft's corporate VP for global privacy and regulatory affairs and chief privacy officer, announces the update to privacy provisions in the Online Services Terms (OST) of its commercial cloud contracts -- saying it's making the changes as a result of "feedback we’ve heard from our customers".
"The changes we are making will provide more transparency for our customers over data processing in the Microsoft cloud," she writes.
She also says the changes reflect those Microsoft developed in consultation with the Dutch Ministry of Justice and Security -- which comprised both amended contractual terms and technical safeguards and settings -- after the latter carried out risk assessments of Microsoft's OST earlier this year and also raised concerns.
Specifically, Microsoft is accepting greater data protection responsibilities for additional processing involved in providing enterprise services, such as account management and financial reporting, per Brill:
Through the OST update we are announcing today we will increase our data protection responsibilities for a subset of processing that Microsoft engages in when we provide enterprise services. In the OST update, we will clarify that Microsoft assumes the role of data controller when we process data for specified administrative and operational purposes incident to providing the cloud services covered by this contractual framework, such as Azure, Office 365, Dynamics and Intune. This subset of data processing serves administrative or operational purposes such as account management; financial reporting; combatting cyberattacks on any Microsoft product or service; and complying with our legal obligations.
Microsoft currently designates itself as a data processor, rather than data controller for these administrative and operations functions that can be linked to provision of commercial cloud services, such as its Azure platform.
But under Europe's General Data Protection framework a data controller has the widest obligations around handling personal data -- with responsibility under Article 5 of the GDPR for the lawfulness, fairness and security of the data being processed -- and therefore also greater legal risk should it fail to meet the standard.
So, from a regulatory point of view, Microsoft's current commercial contract structure poses a risk for EU institutions of user data ending up being processed under a lower standard of legal protection than is merited.
The announced switch from data processor to controller should raise the bar around associated purposes that Microsoft may also provide to commercial customers of its cloud services.
For the latter purpose itself, Microsoft says it will remain the data processor, as well as for improving and addressing bugs or other issues related to the service, ensuring security of the services, and keeping the services up to date.
In August a conference organized jointly by the EU's data protection supervisor and and the Dutch Ministry brought together EU customers of cloud giants to work on a joint response to regulatory risks related to cloud software provision.
Earlier this year the Dutch Ministry obtained contractual changes and technical safeguards and settings in the amended contracts it agreed with Microsoft.
"The only substantive differences in the updated terms [that will roll out globally for all commercial cloud customers] relate to customer-specific changes requested by the Dutch MOJ, which had to be adapted for the broader global customer base," Brill writes now.
Microsoft's blog post also points to other global privacy-related changes it says were made following feedback from the Dutch MOJ and others -- including a roll out of new privacy tools across major services; specific changes to Office 365 ProPlus; and increased transparency regarding use of diagnostic data.