The link you provided does not appear to contradict the assertion in any way. "We have not cut off services to the ICC" != "We have not cut off services to one specific sanctioned individual who just so happened to coincidentally be on the ICC". The linked article even mentions Microsoft were pressed on the specific subject of the individual rather than the ICC as a whole, but declined to comment, so it looks like a regular case of weasel wording to distort the truth.
It is very distressing how many organizations have become dependant on Microsoft and the US cloud for core services. I hope that an unintended consequence of the current US administration's approach is that this becomes less so.
If they'd focused on maximizing the device's usefulness instead of its revenue stream, maybe things would have worked out better.