istio-initializer | Kubernetes Initializer that injects the Istio sidecar | Service Mesh library

Seems to be a versioning problem as the alpha feature is supported for k8s version> 1.7 as mentioned here (https://kubernetes.io/docs/admin/extensible-admission-controllers/#what-are-initializers).

1.7 introduces two alpha features, Initializers and External Admission
Webhooks, that address these limitations. These features allow admission controllers to be developed out-of-tree and configured at runtime.

And it is possible to deploy a version of kubernetes >= 1.7.4 to Azure. Note sure about the deployed version using the portal. But if you use acs-egnine to generate the ARM template, it is possible to deploy a cluster with version 1.7.5.

You can refer here for the procedures https://github.com/Azure/acs-engine. Basically it involves three steps. First, you should create the json file by referring to the clusterDefinition section. To use version 1.7.5, you should specify the attribute "orchestratorRelaease" to be "1.7" and also enable the RBAC by specifying the attribute "enableRbac" to be true. Second, use the acs engine (version >= 0.6.0) to parse the json file to ARM template (azuredeploy.json & azuredeploy.parameters.json should be created). Lastly, use the command "New-AzureRmResourceGroupDeployment" in powershell to deploy the cluster to Azure.

Hope this helps :)