Microsoft has launched an “urgent” external inquiry into allegations Israel’s military surveillance agency has used the company’s technology to facilitate the mass surveillance of Palestinians.

The company said on Friday the formal review was in response to a Guardian investigation that revealed how the Unit 8200 spy agency has relied on Microsoft’s Azure cloud platform to store a vast collection of everyday Palestinian mobile phone calls.

The joint investigation with the Israeli-Palestinian publication +972 Magazine and the Hebrew-language outlet Local Call found Unit 8200 made use of a customised and segregated area within Azure to store recordings of millions of calls made daily in Gaza and the West Bank.

In a statement, Microsoft said “using Azure for the storage of data files of phone calls obtained through broad or mass surveillance of civilians in Gaza and the West Bank” would be prohibited by its terms of service.

The inquiry, to be overseen by lawyers at the US firm Covington & Burling, is the second external review commissioned by Microsoft into the use of its technology by the Israeli military.

The first was launched this year amid dissent within the company and reports by the Guardian and others about Israel’s reliance on the company’s technology during its offensive in Gaza. Announcing the review’s findings in May, Microsoft said it had “found no evidence to date” the Israeli military had failed to comply with its terms of service or used Azure “to target or harm people” in Gaza.

However, the recent Guardian investigation prompted concerns among senior Microsoft executives about whether some of its Israel-based employees may have concealed information about how Unit 8200 uses Azure when questioned as part of the review.

Microsoft said on Friday the new inquiry would expand on the earlier one, adding: “Microsoft appreciates that the Guardian’s recent report raises additional and precise allegations that merit a full and urgent review.”

The company is also facing pressure from a worker-led campaign group, No Azure for Apartheid, which has accused it of “complicity in genocide and apartheid” and demanded it cut off “all ties to the Israeli military” and make them publicly known.

Responding to the announcement, the group criticised Microsoft’s decision to launch an inquiry, describing it as “yet another tactic to delay” meeting its demands.

Since the Guardian and its partners, +972 and Local Call, revealed Unit 8200’s sweeping surveillance project last week, Microsoft has been scrambling to assess what data the unit holds in Azure.

Several Microsoft sources familiar with internal deliberations said the company’s leadership was concerned by information from Unit 8200 sources interviewed for the article, including claims that intelligence drawn from repositories of phone calls held in Azure had been used to research and identify bombing targets in Gaza.

Israel’s 22-month bombardment of the territory, launched after the Hamas-led attack on 7 October 2023, has killed more than 60,000 people, the majority of them civilians, according to the health authority in the territory, though the actual death toll is likely to be significantly higher.

Senior Microsoft executives had in recent days considered an awkward scenario in which Unit 8200, an important and sensitive customer, could be in breach of the company’s terms of service and human rights commitments, sources said.

According to leaked files reviewed by the Guardian, the company was aware as early as late 2021 that Unit 8200 planned to move large volumes of sensitive and classified intelligence data into Azure.

At Microsoft’s headquarters in November that year, senior executives – including its chief executive, Satya Nadella – attended a meeting during which Unit 8200’s commander discussed a plan to move as much as 70% of its data into the cloud platform.

The company has said its executives, including Nadella, were not aware Unit 8200 planned to use or ultimately used Azure to store the content of intercepted Palestinian calls. “We have no information related to the data stored in the customer’s cloud environment,” a spokesperson said last week.

An Israeli military spokesperson has previously said its work with companies such as Microsoft is “conducted based on regulated and legally supervised agreements” and the military “operates in accordance with international law”.

The new inquiry will examine the military’s commercial agreements with Microsoft. Once completed, the company will “share with the public the factual findings that result from this review”, its statement said.