It also went on to say that it would no longer be making minority investments in companies that develop this technology.
The news marks a big change for the company which had been looking to shape how the technology industry uses and approaches facial recognition. It has laid out principles to guide its own development of the technology, at the heart of which are rules about not impinging on democratic freedoms.
Microsoft came under scrutiny last year for participating in a multi-million dollar funding round for AnyVision, which critics of the company said contradicted those basic principles.
Media reports last year suggested that AnyVision’s technology was being used to monitor Palestinians in the occupied West Bank, and resulted in Microsoft launching an investigation into those claims.
Microsoft may not be exiting the market but its decision highlights the ethical and legal issues for companies involved in developing this controversial technology.