Microsoft has built a substantial AI sales business with Chinese companies despite escalating US-China competition in artificial intelligence [1, 2, 3, 4]. ByteDance leads as Microsoft's biggest AI customer in China, spending over US$1 billion annually on Microsoft AI and cloud services [1, 2, 3, 4]. Other major Chinese firms using Microsoft's Azure AI models include Ant Group, Meituan, and Tencent Holdings [1, 2, 3, 4].
Microsoft's China operations accounted for about 1.5% of the company's total revenue in 2024, according to testimony by Brad Smith, Microsoft's president, to the US Congress [1, 2, 3, 4]. The firm cited maintaining a presence in China as useful to track local innovations and serve multinational clients active there [1, 2, 3, 4].
Microsoft markets its AI models in China for diverse applications, including software development and customer service automation [1, 2, 3, 4]. Its unique partnership with OpenAI lets Microsoft control policies for selling OpenAI's GPT models in the Chinese market—differing from OpenAI and Anthropic, who do not sell AI models to Chinese companies over IP theft and misuse concerns [1, 2, 3, 4].
Azure AI revenue in China tripled in the fiscal year ending June 2025, following a prior 400% surge the year before [1, 2, 3, 4]. At an internal Microsoft meeting in July 2025, then-chief commercial officer Judson Althoff highlighted the rapid AI revenue growth in China, saying, "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" [1, 2, 3, 4].
American executives and lawmakers view China's aggressive AI push as a potential existential threat to the US technology industry [1, 2, 3, 4].
Microsoft continues to expand AI model sales and services in China to capture growth amid geopolitical tensions. The company’s next reporting on China AI business performance will come with its fiscal results beyond June 2025.
