Microsoft is making billions selling OpenAI models in China while US tries to restricts AI access
The United States is building a wall around its most advanced artificial intelligence. But one of America's biggest companies appears to be making sure China
The United States is building a wall around its most advanced artificial intelligence. But one of America's biggest companies appears to be making sure China can still knock on the door. In recent months, Washington has tightened restrictions on powerful AI systems. Reports suggest that the most capable American AI models, known as Fable 5 and Mythos, are being kept away from non-US citizens because of fears that China could use them to gain an advantage in the global AI race. Yet, thousands of miles away from Capitol Hill, Microsoft seems to be following a different script. Read Full Story According to a Bloomberg report, Microsoft has quietly built a massive business selling access to AI models and cloud computing services to some of China's largest technology companies. The biggest customer is reportedly ByteDance, the Beijing-based owner of TikTok, which is expected to spend more than $1 billion a year on Microsoft's AI and cloud services.
And ByteDance isn't alone. Chinese giants such as Ant Group, Meituan and Tencent are also said to be major users of AI models through Microsoft's Azure cloud platform. This puts Microsoft in an unusual position. On one hand, America increasingly describes China's AI ambitions as a threat to its economic and national security. US lawmakers regularly warn that China could overtake America in AI, while companies such as OpenAI and Anthropic have chosen not to sell their most advanced models directly to Chinese customers. On the other hand, Microsoft's business strategy appears to see China not as a threat to avoid, but as a market too large to ignore. A booming business in China In fact, Microsoft's own executives have openly celebrated the opportunity. During an internal sales meeting in 2025, then Chief Commercial Officer Judson Althoff reportedly told employees "The world's most elite AI solutions are being built on the western coast of the United States and the eastern coast of China.
The one company bringing those two places together is Microsoft. It's pretty awesome." It was more than just corporate optimism. According to the report, Microsoft's AI revenue in China was growing faster than in any other region, tripling in the fiscal year ending June 2025 after surging 400 per cent the year before. In other words, while Washington was trying to slow China's AI rise, Microsoft was making billions by helping Chinese companies buy AI tools. The contradiction grows The contradiction has become even more striking recently. Just days ago, reports surfaced that Microsoft was exploring whether DeepSeek, an open-source AI model developed in China, could power parts of Copilot Cowork, its enterprise AI assistant. That means the relationship may no longer be one-way, with America selling AI to China. Instead, Microsoft could end up using Chinese AI technology in products sold globally. The company does not host OpenAI models on servers located in China because of fears that intellectual property could be stolen.
Chinese customers access models through Microsoft's global infrastructure, and the company reportedly sells only to established businesses rather than individual developers. Concerns over AI copying There is also growing anxiety about a practice known as "distillation"—where companies use the outputs of powerful AI systems to train their own competing models. According to Bloomberg, OpenAI has privately complained that Microsoft isn't doing enough to prevent Chinese companies from copying its technology. And it's unclear exactly how Chinese companies are using the AI services they purchase. Some of their spending reportedly supports businesses outside China. Ends
The BriefWire