Perhaps the problem is that there is an excuse: it is likely that they believe that they are neither responsible for the images they index, nor are they beholden to proactively engage with law enforcement.
This is where treading the line between conduit and publisher can bite the corporation who is attempting to do so. While Microsoft does not host the images, it does index them and serve links to them. What's more, they also host thumbnails and metadata that allow the images to be browsed and discovered.
Because they host the thumbnails and metadata, are they not a publisher? They're hardly acting as a disinterested router of opaque data when the data served is stored on their servers and indexed by their algorithms.