- Microsoft Corp. has built a big business selling AI models to Chinese companies despite the growing rivalry between the US and China over artificial intelligence.
- The Beijing-based company is on track to spend more than $1 billion a year on Microsoft AI and cloud services, said some of the people, who requested anonymity to discuss a private matter.
- Azure’s AI revenue was growing faster in China than in any other sales territory, with revenue about tripling in the fiscal year that ended in June 2025 and surging 400 per cent the previous year.
- During an internal sales meeting in July 2025, then Chief Commercial Officer Judson Althoff touted Microsoft’s rapid AI growth in China, according to a transcript reviewed by Bloomberg.
- Due to a unique partnership with OpenAI, Microsoft sets its own policies on selling models like the GPT series in China.
- Microsoft finds it useful to have a presence in China to keep up with local innovations and serve multinational customers, according to a person familiar with the company’s thinking.
- The China operation remains relatively small and accounted for only about 1.5 per cent of overall revenue in 2024, President Brad Smith said during congressional testimony.
- Microsoft employs automated monitoring to help to prevent customers from using AI models to build competing products.
- To sell products in China, Microsoft must partner with local providers.
- However, under its agreements with OpenAI, Microsoft doesn’t host models in server farms located in China owing to fears that the intellectual property could be stolen.
Microsoft's AI revenue in China has surged, tripling in the fiscal year ending June 2025, driven by strong demand for its models and cloud services.
The Beijing-based company is projected to spend over $1 billion annually on Microsoft AI and cloud services, highlighting the growing importance of this market.2
Microsoft’s President, Brad Smith, noted that the China operation accounted for only 1.5 percent of overall revenue in 2024, indicating room for growth despite current challenges.7
During an internal sales meeting, then Chief Commercial Officer Judson Althoff emphasized that Azure's AI revenue was expanding faster in China than in any other territory, with a remarkable 400 percent increase the previous year.4
Microsoft’s unique partnership with OpenAI allows it to set its own policies for selling models like the GPT series in China, although it does not host models in local server farms due to intellectual property concerns.5
To effectively operate in China, Microsoft collaborates with local providers and employs automated monitoring to prevent the misuse of its AI models for competing products.
As the US-China rivalry intensifies, Microsoft’s strategic presence in China aims to keep pace with local innovations and cater to multinational customers.
“Microsoft is expanding its AI business in China by selling OpenAI models, with AI revenue tripling in the fiscal year ending June 2025. The company is on track to earn over $1 billion annually from AI and cloud services in the region.”
