Microsoft has denied that the company helped US intelligence services spy on users’ web chats, emails and data in cloud storage facilities.
The reports claimed that Microsoft even helped the US National Security Agency (NSA) to circumvent the company's own encryption.
But Microsoft denies the report, according to BusinessInsider.com.
The company issued a statement saying that it provides user data only in response to a due legal process and that it does not "provide any government with blanket or direct access to SkyDrive, Outlook.com, Skype or any Microsoft product".
Microsoft is one of nine top tech companies to have been linked to the controversial Prism programme, but all have denied giving the NSA direct access to their systems.
In its strongest response to the allegations so far, Microsoft said there were clear principles which guide responses to demands for customer information for law enforcement and national security issues.
The company said it provides customer data only in response to legal processes, its compliance team examines all demands very closely to see if they are valid, and Microsoft only ever complies with orders about specific accounts or identifiers.
However, the statement called for greater transparency around these processes “that would help everyone understand and debate these important issues”.
Read more about Prism and the NSA
- Security Think Tank: Prism fallout could be worse than security risks
- Security Think Tank: Prism is dangerous for everyone
- Security Think Tank: Prism – Sitting duck or elaborate honeypot?
- NSA surveillance whistleblower reveals identity
- US repeatedly hacked China, claims NSA whistleblower
- FBI spies on internet users
- UK links to US internet surveillance remain unclear
- Technology companies call for more transparency over data requests
- Compliance: The Edward Snowden, NSA program controversy continues
Yahoo's involvement with the Prism programme
The company wants the court that approves government data requests under the Foreign Intelligence Surveillance Act (Fisa) to release documents proving the internet company “objected strenuously” to intelligence agencies accessing its data.
The documents relate to a 2008 case in which Yahoo attempted to resist NSA demands for customer information, but its objections were overruled. The case was subsequently used by the US government to persuade tech companies to co-operate with the Prism programme.
Under federal law, the ruling and Yahoo's arguments against it have been treated as classified information. Providing more information would "inform this debate and prevent misunderstandings", the company said.
Despite the denials by the tech companies since the Prism programme was revealed, internal NSA newsletters, marked top secret, suggest the co-operation between the intelligence community and the companies is deep and ongoing, according to the latest Guardian report.