Microsoft once fueled the "neocloud" boom by signing tens of billions of dollars in contracts with emerging data center operators to meet demand for cloud and AI services. Now, those neocloud companies are facing project delays, regulatory hurdles, and soaring costs—and some Microsoft executives are regretting it. According to people familiar with the matter, Microsoft is tightening oversight of some data center projects at Nebius, IREN, and Nscale, pulling out of high-risk projects, and internally discussing whether to keep signing new neocloud deals.