Microsoft is expanding its AI business in China, with ByteDance spending over $1 billion（約1600億円） annually on Azure and AI services—a move that positions the company as a bridge between US and Chinese AI ecosystems at a time when rivals like OpenAI have largely stayed out of the market.

What happened: ByteDance, parent company of TikTok, has emerged as Microsoft's largest AI customer in China and is on track to exceed $1 billion（約1600億円） in annual spending on Azure and AI-related services. Other Chinese companies including Ant Group, Meituan, and Tencent also purchase AI models through Microsoft's Azure platform. According to an internal sales meeting transcript from July 2025, Azure AI revenue in China roughly tripled in the fiscal year ended June 2025, following growth of about 400% the previous year.

Why it matters: Microsoft has become a key provider of OpenAI models in China through Azure, filling a gap left by OpenAI and Anthropic, which have largely kept their own services out of the Chinese market due to concerns over intellectual property protection and potential misuse. This positions Microsoft as what its then-Chief Commercial Officer Judson Althoff described as the company "bringing those two places together," referring to AI ecosystems in the United States and China. For context, China represented about 1.5% of Microsoft's revenue in 2024.

What to watch: Microsoft has not publicly commented on the Bloomberg report detailing these operations. The company's shares traded about 1% lower on Thursday and are down more than 22% year to date.