Microsoft has built a sizable AI business serving Chinese companies by selling OpenAI and other models through Azure, its cloud platform, despite rising US-China tensions over AI.

ByteDance has generally been Microsoft’s biggest AI customer in recent years and is on track to spend more than US$1 billion a year on Microsoft’s AI and cloud services.

Ant Group, a Hangzhou-based fintech company affiliated with Alibaba, Meituan, a Beijing-based food delivery and local services platform, and Tencent Holdings are also significant spenders.

Microsoft has said eligible Chinese customers can receive access to Azure OpenAI through models deployed outside China, while Azure China, operated by 21Vianet, is separate from Microsoft’s global Azure network.

That setup reflects Chinese rules that heavily restrict foreign cloud providers operating in the country.

It also reflects a gap in US export controls because analysts say current rules do not control cloud computing services in the same way as physical chip exports.

The arrangement could still face tighter scrutiny. A bill aimed at closing the so-called cloud loophole passed the House in September 2024.

🔗 Source: Bloomberg

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