U-Prove helps to ensure that users disclose only the minimum amount of personal information when buying goods and services online in a bid to combat privacy violations.
The technology was developed by Stefan Brands at Credentica, and employs cryptography to prevent cyber-criminals compiling user details.
Kim Cameron, chief architect of identity and access at Microsoft, said that U-Prove is particularly suited to medical applications, military systems and identity outsourcing.
"U-Prove is the equivalent in the privacy world of RSA in the security space, " said Cameron in a blog post.
As part of the deal, Brands will join Microsoft's Identity and Access Group along with Credentica colleagues Greg Thompson and Christian Paquin.
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