Microsoft Corporation (MSFT): PRISM Shines on Complicit Company?

Microsoft Corporation (NASDAQ:MSFT) was always a little suspicious to us when it came out with its tepid non-denial denial of its direct and willing involvement in the wide-ranging PRISM surveillance program run by the National Security Agnecy. Our healthy skepticism was documented before (here, for one) after we heard from most of the nine tech companies that were mentioned as “partners” in some way with the online snooping cartel.

Seven of the nine companies – which included Apple Inc. (NASDAQ:AAPL) and Yahoo! Inc. (NASDAQ:YHOO) – all voiced very strong denials of any known involvement in the NSA program, claiming that they knew nothing about the program and did not grant access to their servers to the NSA or any other government agency. We took note that Microsoft Corporation (NASDAQ:MSFT) and Google Inc (NASDAQ:GOOG) took a less-than-adamant approach to their denials, saying that they only gave out user information that was legally compelled to do – without actually addressing PRISM as a separate case but rather lumping it in with all of the other government requests that the companies receive weekly.

If the latest leaked documents are any indication, then our skepticism at least about Microsoft Corporation (NASDAQ:MSFT) could very well have been justified. In some of the latest leaked classified documents from whistleblower Edward Snowden and reported by The Guardian, there seems to be some strong evidence that Microsoft may have been an active partner and participant in the PRISM program, based on some of the actions reportedly taken by the company.

These documents, if legitimate, will likely cause much consternation among the millions who use Microsoft Corporation (NASDAQ:MSFT) products and services like Outlook.com and Skype. The documents purportedly show that Microsoft  actually opened up encryption of its Outlook.com e-mail client before the service officially launched, allowing the NSA access to messages. Also, it is reported that Microsoft was able to allow the NSA to directly snoop and gather information from  Skype video calls. There was also evidence that suggested tha the NSA was able to get access to Microsoft’s cloud service called SkyDrive and collect information about users, which total about 250 million globally; and much of the information the NSA gathered through PRISM was routinely shared with fellow agencies the FBI and CIA.

Of course, what does Microsoft Corporation (NASDAQ:MSFT) have to say about this now? So far, it’s a familiar refrain.

In a statement, Microsoft said, “When we upgrade or update products we aren’t absolved from the need to comply with existing or future lawful demands. … (We provide customer data) only in response to government demands and we only ever comply with orders for requests about specific accounts or identifiers.”

What do you think? If Microsoft Corporation (NASDAQ:MSFT) is truly this deep, how much does this affect the company in overall public perception and the perception of investors like fund manager David Tepper (see his full equity portfolio)? Do you see the stock dropping as a result of this PR nightmare and investors bail out? Give us your take in the comments section below.

DISCLOSURE: None