Traffic Drops and "resource-unavailable" Sessions due to ATP Inline Cloud Analysis Latency with default timeout with customer Proxy architecture

• Legitimate traffic (e.g., VMware, MS O365, internal services) is intermittently blocked.
• Threat logs show false positive verdicts such as "Evasive Empire C2 Traffic Detection" or "inline-cloud-c2" (Threat IDs 89958, 89956, 89953).
• Global counters like 'ctd_wif_mlc2_max_latency_timeout' and  'ctd_wif_csc2_max_latency_timeout' increasing
• Sessions end prematurely with the end reason logged as resources-unavailable (or resource-unavailable):

Session       571429140

        c2s flow:
                source:      1.1.1.1 [trust]
                dst:         2.2.2.2
                proto:       6
                sport:       53751           dport:      8082
                state:       DISCARD         type:       FLOW
                src user:    unknown
                dst user:    unknown
                offload:     Yes

        s2c flow:
                source:      2.2.2.2 [untrust]
                dst:         1.1.1.1
                proto:       6
                sport:       8082            dport:      53751
                state:       DISCARD         type:       FLOW
                src user:    unknown
                dst user:    unknown
                offload:     Yes

        Slot                                 : 3
        DP                                   : 1
        index(local):                        : 1003796
        start time                           : Wed Feb 18 18:43:30 2026
        timeout                              : 90 sec
        time to live                         : 12 sec 
        total byte count(c2s)                : 1756
        total byte count(s2c)                : 1470
        layer7 packet count(c2s)             : 5
        layer7 packet count(s2c)             : 6
        vsys                                 : vsys1
        application                          : ssl  
        rule                                 : Outbound-app-proxy1
        service timeout override(index)      : False
        session to be logged at end          : True
        session in session ager              : True
        session updated by HA peer           : False
        layer7 processing                    : completed
        URL filtering enabled                : True
        URL category                         : internal, insufficient-content, low-risk
        session via syn-cookies              : False
        session terminated on host           : False
        session traverses tunnel             : False
        session terminate tunnel             : False
        captive portal session               : False
        ingress interface                    : ethernet1/13
        egress interface                     : ethernet1/14
        session QoS rule                     : N/A (class 4)
        end-reason                           : resources-unavailable <<<<<<

• Firewall dataplane packet diagnostics indicate that the service was aborted by the firewall before a verdict was received (e.g., serviceAborted 0x100)
• Anti-Spyware Profile has allow-on-max-latency set to no (fail-close) and max-latency set to the default of 200 ms.
• Customer architecture includes Proxies (Either Transparent or Explicit)

• MICA enabled
• ATP license
• Any Platform
• Any PAN-OS

• The inline-cloud-proxy feature routes MICA traffic through the customer's explicit proxy, which introduces significant network latency into the datapath. The default max-latency timeout for ATP inspection is highly sensitive, set at 200ms.
• If the proxy network delay plus the cloud processing time exceeds this 200ms threshold, the firewall's max-latency timer expires.
• Consequently, the firewall sends an abort message to the cloud, canceling the verdict request. Because the allow-on-max-latency setting is configured to no (fail-close), the firewall drops the uninspected traffic, resulting in the resources-unavailable end reason and corresponding threat logs

1. Consider temporarily setting allow-on-max-latency to yes (fail-open) in your inline spyware settings. This will immediately stop the massive scale of legitimate traffic drops while you investigate and tune the timeout settings
2. Increase the max-latency value for ATP to accommodate the proxy's network delay. Based on telemetry, increasing the timeout to 1000 ms (1 second) is strongly recommended for environments using explicit proxies
3. For internal traffic that does not require cloud inspection (such as internal VMware host migrations), add the relevant source and destination IP addresses to the "ML IP Whitelist" / Inline Cloud Analysis exclude list within the Anti-Spyware profile to bypass MICA inspection entirely
4. Monitor traffic during peak business hours to verify that the resources-unavailable session drops have ceased and that verdicts are being successfully received. If timeouts persist and telemetry shows excessive network latency (e.g., above 3 seconds or high Send:Receive drop ratios), the internal network/proxy team must investigate the proxy health