James Martin/CNET

Microsoft has pulled its minority investment out of a facial recognition startup that made headlines last year for allegedly surveilling Palestinians, the tech giant said Friday. Microsoft also said it would halt any minority investments in companies selling facial-recognition technology.

A Microsoft-funded investigation led by former US Attorney General Eric Holder determined that AnyVision's technology doesn't power mass surveillance in the West Bank. Nevertheless, Microsoft said it's divested itself of the AnyVision holding and won't be a minority stakeholder in any other facial recognition firms because it can't adequately oversee the companies that way.

Being a minority investor in a company that sells sensitive technology generally doesn't offer "the level of oversight or control that Microsoft exercises over the use of its own technology," the company said in a statement posted to Microsoft's website for M12, the company's venture investment fund.

Last year, Microsoft hired Holder to investigate whether AnyVision violated Microsoft's ethics. An October report by NBC News said facial recognition technology created by AnyVision had been used in a secret military effort to conduct surveillance of Palestinians in the West Bank; AnyVision rejected the report's claim.

Friday, Microsoft reported the findings of Holder's investigation, which said available evidence demonstrates that "AnyVision technology has not previously and does not currently power a mass surveillance program in the West Bank that has been alleged in media reports."