Overview
- Reporting on Thursday revealed Microsoft offers Chinese companies access to OpenAI’s GPT series and other advanced models via its Azure cloud, with ByteDance the largest customer and projected to spend more than $1 billion a year.
- Microsoft routes model hosting to data centers outside China, such as Singapore, sells only to established corporate customers, and uses automated monitoring to try to limit misuse.
- OpenAI has privately told Microsoft it worries its models could be copied through a process called distillation, which can be done using only API outputs and is hard to stop completely.
- Azure’s AI business in China has grown rapidly, about tripling in the fiscal year to June 2025 after a 400% surge the prior year, even though Microsoft’s China revenue was roughly 1.5% of total revenue in 2024.
- U.S. lawmakers and policy analysts are scrutinizing the so‑called cloud loophole and a bill to restrict cross‑border access to advanced models is gaining momentum, which could force new limits or compliance changes for Microsoft.