Data processing responsibilities will be clearly defined on all commercial cloud contracts as of early 2020
Microsoft has said it will be updating its privacy provisions for commercial cloud contracts after a report from EU regulators last month questioned the company's ability to comply with data laws.
The European Data Protection Supervisor (EDPS), an independent authority that oversees the application of GDPR, launched an investigation in April to assess whether the company's contracts with EU institutions violated the rules.
The results of that investigation, released in October, raised "serious concerns" about Microsoft's ability to provide appropriate safeguards for the processing of data done on behalf of the EU bodies it services.
In a statement on its website on Monday, Microsoft said: "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".
Last year the company worked alongside the Dutch Ministry of Justice and Security to amend contractual terms of a services agreement after authorities raised similar concerns about the lack of technical safeguards for the processing of data.
"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," the company said.
"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.
"The change to assert Microsoft as the controller for this specific set of data uses will serve our customers by providing further clarity about how we use data, and about our commitment to be accountable under GDPR to ensure that the data is handled in a compliant way."
Microsoft will remain the data processor when providing its services, fixing bugs, operating security services, and providing software updates, the statement added.
The policy overhaul comes just days after the company committed to applying the California Consumer Privacy Act to all US states once it comes into force in January 2020, although it has no legal obligation to do so.
The company expects the new policy terms to be applied to all commercial cloud contracts by the beginning of 2020.