Microsoft has quietly built a large business selling OpenAI models in China, supplying the technology to the country's biggest internet companies. This puts Microsoft in a unique position — no other American AI vendor holds this role, as both OpenAI and Anthropic refuse to sell directly into the Chinese market.
According to artificialintelligence-news.com, both OpenAI and Anthropic have declined to sell into China directly, and Anthropic's models are absent from Microsoft's China line-up altogether.
ByteDance leads as Microsoft's biggest AI customer in China
The scale of this business is not small. ByteDance, the parent company of TikTok, has been Microsoft's largest AI customer in recent years. It runs largely on OpenAI models and is on track to spend more than US$1 billion a year on Microsoft's AI and cloud services, according to people familiar with the matter.
Other major Chinese companies buying from Microsoft include Ant Group, Meituan, and Tencent, as reported by ETCIO.
How Microsoft sells OpenAI models in China
Microsoft does not host these models on servers in China. Instead, it sells only to established companies and uses local partners to facilitate the deals. This approach allows Microsoft to serve Chinese firms while keeping the technology physically outside the country.
As noted by The Business Times, Microsoft has made big AI inroads in China by selling OpenAI models, even as OpenAI and Anthropic voice concerns about the country's AI efforts.
Why OpenAI and Anthropic won't sell in China
Both OpenAI and Anthropic have chosen not to sell their models directly into China. Their concerns center on intellectual property protection and the potential misuse of AI technology. This creates a gap in the market that Microsoft has stepped in to fill.
A Bloomberg Business Facebook post confirmed that Microsoft has built a large business selling AI models in China even as OpenAI and Anthropic voice concerns about the country's AI efforts.
Our Take: A strategic move with risks
In our view, Microsoft's approach is a calculated business decision. By selling OpenAI models in China, Microsoft captures revenue that would otherwise be lost entirely. But it also carries risks. If Chinese companies use these models in ways that violate OpenAI's policies, Microsoft could face backlash. The arrangement also highlights a growing divide in the AI industry — where the creators of the most advanced models are unwilling to serve certain markets, but their investors and partners are happy to step in. For now, Microsoft holds a position no other American AI vendor has, and it is making the most of it.