This post discusses the differences between SQL Azure and SQL Server in the context of security
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| Supports SQL(native) and Windows authentication. | Supports SQL(native) only, no windows authentication. |
| Authorization is based on database users and roles. | Authorization is based on database users and roles. |
| SQL Server has fixed server roles such as serveradmin, securityadmin and dbcreator. | There are no fixed server roles such as in sql server but it has loginmanager and dbmanager roles in Master DB to simulate relevant server roles. |
| Accessing SQL Server over wire is via Tabular Data Stream (TDS) plus SSL on port TCP 1433. Using SSL is optional. | Accessing SQL Azure over wire is same as SQL server using TDS but SSL is mandatory |
| Firewall and IP blocking is using hosted firewall. | SQL Azure has built-in firewall which blocks all external IP’s until you specify to allow. |
| SQL Server supports native encryption at page level using transparent data current. TDC | SQL Azure does not supports the native encryption. |
More detailed comparison can be found here
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