Microsoft Corp. (NASDAQ:MSFT) is expanding its artificial intelligence business in China, with ByteDance expected to spend more than $1 billion annually on the company’s AI and cloud services, according to a report from Bloomberg.
Bloomberg reported that while Microsoft has become the leading provider of OpenAI models in China, offering access to the GPT series through its Azure platform, OpenAI and Anthropic have largely kept their services out of the Chinese market due to concerns about intellectual property protection and potential abuse.
TikTok’s parent company ByteDance has been Microsoft’s biggest AI customer in recent years, with annual spending on Azure and AI-related services on track to exceed $1 billion, people familiar with the matter told Bloomberg.
Other Chinese companies such as Ant Group, Meituan, and Tencent are also purchasing AI models through Azure, according to the report.
Bloomberg cited a transcript of an internal sales meeting in July 2025 in which then-Chief Commercial Officer Judson Althoff told employees that Azure AI’s revenue in China nearly tripled in the fiscal year ending June 2025, following growth of about 400% a year earlier.
Althoff reportedly referred to Microsoft as a company that “brings those two places together,” referring to the U.S. and Chinese AI ecosystems.
Microsoft President Brad Smith previously told U.S. lawmakers that China will account for about 1.5% of the company’s revenue in 2024, Bloomberg reported.
Microsoft has not publicly commented on the report.
The company’s stock was trading about 1% lower at $375 on Thursday, and has fallen more than 22% since the beginning of the year.
