Microsoft has pledged to tighten its security policies to combat the "government snooping" uncovered in recent intelligence leaks.
User data held by the company was revealed as a major target of the US government's PRISM surveillance program. Yahoo, Google and AOL were also embroiled in the scandal.
"Many of our customers have serious concerns about government surveillance of the internet. We share their concerns," explained Microsoft legal exec Brad Smith. "That's why we are taking steps to ensure governments use legal process rather than technological brute force to access customer data."
Microsoft will bolster encryption across Windows Azure - the cloud computing technology used in Xbox One - plus SkyDrive, Outlook and Office 365. Data that users submit to Microsoft will be encrypted by default, and will also now be encrypted when moved between Microsoft data centres.
"All of this will be in place by the end of 2014, and much of it is effective immediately," Smith said, who added that Microsoft now viewed government intrusion into its infrastructure as an "advanced persistent threat" of a similar nature to "sophisticated malware and cyber attacks".
The company has also pledged to be more transparent with users on when it is legally forced to disclose user information, and fight governmental gagging orders blocking its ability to do so.
"We want to ensure that important questions about government access are decided by courts rather than dictated by technological might. And we're focused on applying new safeguards worldwide, recognising the global nature of these issues and challenges," Smith concluded.