Microsoft will open the new international Transparency Center in Brussels, as part of its promise to improve transparency of its data protection methods, following snopping allegations.
The decision follows its plan to protect personal data of foreign customers by storing them on servers located outside the US, in the wake of recent illegal surveillance disclosures.
Expected to open by late 2014, the centre will allow the government customers to review source code to ensure that there is no back doors.
The centre is part of Microsoft's strategy to expand encryption across its services, strengthen legal protections for customer data as well as improve the transparency of software code.
Microsoft Security vice president Matt Thomlinson said while there is much that industry can do to help protect the privacy of customers, the way forward will not only require technical solutions, it needs to be accompanied by effective policies.
"The private sector has highlighted the need for basic global principles for reforming international government surveillance," Thomlinson added.
"Government and the private sector must work together to move us from this current crisis of trust to a new era of confidence in cyberspace."
According to the company, the trust rebuilding process can progress by continuing international cybersecurity engagement with a robust dialogue about global cybersecurity.
The company also proposes a group of "G20 + 20" group - 20 governments and 20 global information and communications technology firms to set out principles for behaviour in cyberspace.