Microsoft said it would await federal regulation before selling facial recognition technology to police.
This makes it the latest big firm to back away from the business following protests against law enforcement brutality and bias.
The announcement came shortly after rival Amazon.com declared it was pausing police use of its "Rekognition" service for a year and IBM said it no longer offers the software generally
In a statement, Microsoft said it has worked on enacting principles and legislation for the software's use.
"We do not sell our facial recognition technology to US police departments today, and until there is a strong national law grounded in human rights, we will not sell this technology to police," the company said.
The death of George Floyd, a black man pinned down by a white officer who kneeled on his neck for nearly nine minutes, prompted worldwide protests against racial inequity.
Concerns also arose over whether facial recognition could be used against protesters unfairly.
Research found that face analysis was less accurate for people with darker skin tones, adding to activists' warnings that false matches could lead to unjust arrests.
Matt Cagle, an attorney with the American Civil Liberties Union of Northern California, said, "When even the makers of face recognition refuse to sell this surveillance technology because it is so dangerous, lawmakers can no longer deny the threats to our rights and liberties."
Facial-recognition vendors working with police have included Idemia and DataWorks Plus.
One of Amazon's early law enforcement customers, the Washington County Sheriff's Office in Oregon, decided to halt its programme after the tech company's policy change.
"This programme was an innovation in law enforcement technology worth exploring, but until stronger regulations to govern the ethical use of it are in place, our programme has been suspended indefinitely," it said in an internal memo seen by Reuters.
It was unclear if others would follow suit.
Militaries and intelligence agencies also use facial recognition, an old tool that has become common in recent years because of newer computer models that detect patterns in faces and objects.
But concerns persist over weaknesses with people of colour and targeted use against minorities.
Microsoft said it was updating how it reviews customers looking to deploy the technology widely.
Mike Jude, a director at research firm IDC, said the big companies' decisions - at a time of regulatory scrutiny in the US and Europe - would earn goodwill without sacrificing much business.
"Is facial recognition a big deal for any of the companies right now? No," he said. "It will be smaller players that provide specific solutions to law enforcement that will be put in a bind."