The problem grew so great that Microsoft eventually allowed some of their source code to be inspected by foreign governments, which was a radical departure from their normal policies. Oddly, even though they evidently only opened bits and pieces of code, the ploy was successful. Foreign government IT specialists looked over source material offered-up by Microsoft, deemed it to be safe enough for government work, and the issue went away.
I suspect the issue will be returning to the table, now that they realize what they really needed to see wasn’t source code but security vulnerabilities and Microsoft’s policy for dealing with them. Many government clients are obviously going to see this as a betrayal of trust. Here they’ve been trusting Microsoft with their most sensitive data only to discover that their trusted friend Steve Ballmer has been handing over the keys to their computers to the U.S. spook community.