Microsoft has built a big business selling artificial intelligence models to Chinese companies despite the growing rivalry between the U.S. and China over the technology.
Social media and AI giant ByteDance has generally been Microsoft’s biggest AI customer in recent years, largely using OpenAI models, according to people familiar with the matter. 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.
Other Chinese tech firms, such as Ant Group, Meituan and Tencent Holdings are also significant spenders on AI models via Microsoft’s Azure cloud service, people familiar with the business said.
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% of overall revenue in 2024, Microsoft President Brad Smith said during congressional testimony.
But the company’s China business is controversial in some quarters.
American tech executives and lawmakers have described China’s AI push as a potentially existential threat to the U.S. industry. Citing fears of intellectual property theft or harmful uses, Anthropic and OpenAI don’t sell their models to companies in China.
Microsoft and OpenAI declined to comment.
Behind the scenes, Microsoft has not demonstrated the same apprehensions — quite the opposite. 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 for this article.
“The world’s most elite AI solutions are being built on the western coast of the United States and the eastern coast of China,” Althoff said. “The one company bringing those two places together is Microsoft. It’s pretty awesome.”
Azure’s AI revenue was growing faster in China than in any other sales territory, Althoff told employees — about tripling in the fiscal year that ended in June 2025 and surging 400% the previous year.
Due to a unique partnership with OpenAI, Microsoft sets its own policies on selling models such as the GPT series in China. It also offers a variety of other AI models there, excluding some like Anthropic’s. Microsoft markets them to customers for a number of uses, ranging from software development to customer service automation.
ByteDance, Meituan and Tencent didn’t respond to requests for comment, and it’s unclear how they use the models they buy on Azure. Much of their spending goes toward supporting expansion outside of China, according to people familiar with their businesses.
The Chinese companies named in this story all train their own AI models. ByteDance,...