Microsoft helped the NSA get around its encryption systems so the agency could more easily spy on users of its services, reports suggest.
Papers given to The Guardian newspaper allege there were close links between the security agency and the tech firm.
Microsoft said its collaboration with the NSA only took place because legal obligations required it to do so.
The revelations come as some technologists start work on services they say will be impervious to spying.
The information published in The Guardian comes from documents it said were given to the paper by whistle blower Edward Snowden and shed more light on how closely tech firms work with the US National Security Agency and its Prism programme.
The documents show that the NSA had access to most of Microsoft's flagship products including Hotmail, Outlook.com, Skydrive and Skype. In the case of Outlook.com, Microsoft reportedly worked with the NSA to help it get around its own data-scrambling scheme that would have concealed messages from the agency.
As regards to Skype, the NSA reportedly said in the documents that it had improved its oversight of the web phone system so much that it could now collect three times as many calls from the service than before.
Even before Skype was bought by Microsoft it was providing information on some of its users through Prism.
The documents seen by The Guardian are reportedly from the NSA's Special Source Operations office which oversees the links between the agency and tech firms. The documents show that the access the NSA enjoyed made it far easier for intelligence workers to get at accounts on many Microsoft services.
In a statement released in the wake of the Guardian story, Microsoft said "legal obligations" forced it to work with the NSA and provide access to its services.
"We have clear principles which guide the response across our entire company to government demands for customer information for both law enforcement and national security issues," it said.
In some cases when it upgraded or updated products, it said, these legal obligations meant it had to preserve the access that law enforcement and intelligence agencies enjoyed with older versions of those services.
It said it only complied with orders relating to "specific accounts and identifiers" rather than more wide-ranging requests.
"Microsoft does not provide any government with blanket or direct access to Skydrive, Outlook.com, Skype or any Microsoft product," it said.
The revelations come as three Swedish technology entrepreneurs seek donations for a smartphone messaging app that, it is claimed, will be impervious to the type of spying used by the NSA. In less than two days, more than $137,000 (£90,000) has been raised for the Heml.is app which has the backing of Pirate Bay co-founder Peter Sunde.
"We're building a message app where no one can listen in, not even us," the entrepreneurs said in a video explaining how Heml.is would work.