I have an Ubuntu 16.04 (Xenial) running inside an Azure VM. I have followed the instructions to install Docker and all seems fine and dandy.
One of the things that I need to do when I trigger docker run is to pass --net=host, which allows me to run apt-get update and other internet-dependent commands within the container. 
The problem comes in when I try to trigger docker build based on an existing Ubuntu image. It fails:
The problem here is that there is no way to pass --net=host to the build command. I see that there are issues open on the Docker GitHub (#20987, #10324) but no clear resolution.
There is an existing answer on Stack Overflow that covers the scenario I want, but that doesn't work within a cloud VM.
Any thoughts on what might be happening?
UPDATE 1:
Here is the docker version output:
Client:
 Version:      1.12.0
 API version:  1.24
 Go version:   go1.6.3
 Git commit:   8eab29e
 Built:        Thu Jul 28 22:11:10 2016
 OS/Arch:      linux/amd64
Server:
 Version:      1.12.0
 API version:  1.24
 Go version:   go1.6.3
 Git commit:   8eab29e
 Built:        Thu Jul 28 22:11:10 2016
 OS/Arch:      linux/amd64
UPDATE 2:
Here is the output from docker network ls:
NETWORK ID          NAME                DRIVER              SCOPE
aa69fa066700        bridge              bridge              local               
1bd082a62ab3        host                host                local               
629eacc3b77e        none                null                local   
