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How can I create a new instance of App Service using the Azure CI/CD? My goal is to run the test E2E in each branch automatically and enable QA to test. I couldn't find any material about it. I am open to other options using containers etc.

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I think below demo will help you to deploy app service using CI/CD. In this demo it use Terraform to deploy azure app service.

https://azuredevopslabs.com/labs/vstsextend/terraform/