Microsoft says Chinese hackers breached email, including U.S. government agencies

Updated July 12, 2023 at 12:15 PM ET

Tech giant Microsoft disclosed on Tuesday evening that it discovered a group of Chinese hackers had broken into some of its customers' email systems to gather intelligence.

The company began investigating unusual activity within a few weeks of the initial attack, though the culprits were able to repeatedly manipulate credentials to access accounts.

According to the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency, one federal government agency first detected unusual activity on its Microsoft 365 email cloud environment last month, and immediately reported the activity to Microsoft and CISA.

CISA did not identify the government agency in question in a blog post published on Wednesday concerning the breach.

However, a State Department spokesperson said later on Wednesday that the department "detected anomalous activity" and "took immediate steps to secure our systems," suggesting it may have been the agency to first alert Microsoft to the problem. The State Department declined to comment further on its cybersecurity incident response, which "remains under active investigation," according to the spokesperson.

The hackers, which Microsoft identified as China-based actors from a group it calls Storm-0558, were able to break in and steal some data from the accounts, according to CISA's blog post. However, the data that was taken was unclassified, according to CISA.

It's unclear how many U.S. government agencies were targets, and what exactly was stolen. However, Microsoft says the attack is now contained.

The breach reveals the ongoing challenge of keeping sophisticated actors out of systems. Microsoft describes the hackers as "well-resourced" and "focused on espionage."

However, this is not the first time Microsoft has been the target of this kind of breach. The U.S. government is putting pressure on companies to hold high security standards.

"Last month, U.S. government safeguards identified an intrusion in Microsoft's cloud security, which affected unclassified systems. Officials immediately contacted Microsoft to find the source and vulnerability in their cloud service," wrote Adam Hodge, the acting senior director for press at the White House's National Security Council, in a statement. "We continue to hold the procurement providers of the U.S. Government to a high security threshold."

The spy game

These kinds of hacks are, unfortunately, a common part of the spy game — a game of breaches and patches, protection and response between the U.S. and its adversaries.

The goal is to limit the number of vulnerabilities available for adversaries to exploit, as well as the time hackers are able to lurk inside systems without being detected. Additionally, it's especially important for agencies to protect more sensitive information outside of online email systems. That goes especially for organizations that are attractive targets to spies, from U.S. government agencies to critical infrastructure companies, defense contractors and others.

In this case, CISA confirms that it is Microsoft's responsibility to patch the vulnerability and enhance security for authentication procedures, to prevent hackers from mimicking authorized users.

Even so, CISA advises organizations to be on high alert for suspicious activity, given the recent breach. In an advisory, the agency outlines procedures for enhanced monitoring and logging as well as how to contact Microsoft if suspicious activity is detected.

"Critical infrastructure organizations are strongly urged to implement the logging recommendations in this advisory to enhance their cybersecurity posture and position themselves to detect similar malicious activity," wrote CISA.

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