Our government has a pretty long track record of privatizing law enforcement (not to mention prisons, warfare, etc...) so it's not surprising to see this handed off to Microsoft. If anything, a company like MS, Google or Mozilla at least has the expertise to do a good job.
But it's pretty strange that control was not given to the corresponding government authority.
They could then have MS work as "consultants". I don't agree either, but at least that would have made some sort of sense. Maybe even better if it wasn't just one company but a panel of several institutions, including IETF for example, or something like that.
Still not happy to see it, though.