According to Bloomberg, Microsoft is expanding its artificial intelligence business in China, and ByteDance is expected to spend more than $1 billion annually on Microsoft's artificial intelligence and cloud services. Bloomberg reports that Microsoft has become the main provider of OpenAI models in China, providing access to the GPT family of models through its Azure platform, while OpenAI and Anthropic have largely excluded their services from the Chinese market due to concerns about intellectual property protection and potential abuse.
TikTok parent ByteDance has been Microsoft's largest AI customer in recent years and is on track to spend more than $1 billion annually on Azure and AI-related services, people familiar with the matter told Bloomberg.
Other Chinese companies, including Ant Group, Meituan and Tencent, also purchase AI models through Azure, reports show.
Bloomberg cited transcripts of an internal sales meeting in July 2025, where then-Chief Commercial Officer Judson Althoff told employees that Azure AI revenue in China nearly tripled in the fiscal year ending in June 2025, compared with growth of about 400% the year before.
Altov reportedly described Microsoft as a company that "connects these two places," referring to the U.S. and Chinese artificial intelligence ecosystems.
Microsoft President Brad Smith has previously told U.S. lawmakers that the Chinese market will account for about 1.5% of the company's revenue in 2024, according to Bloomberg.
Microsoft has not commented publicly on the report.
The company's shares fell about 1% to $375 on Thursday and are down more than 22% so far this year.
Related articles:
Microsoft cuts hundreds of cloud computing jobs in China and shrinks operations again amid tightening data regulations in China and the U.S.