Microsoft sells OpenAI models in China. OpenAI and Anthropic won’t.

Microsoft has quietly become the main supplier of OpenAI models in China, selling the technology to the country’s largest internet companies even as OpenAI and Anthropic keep their own models out of the market on intellectual-property and misuse grounds. The arrangement, detailed this week by Bloomberg , hands Microsoft a position no other American AI vendor holds: it sells the GPT series to Chinese firms that the model’s own creator will not deal with directly. The scale is not trivial. ByteDance has been Microsoft’s largest AI customer in recent years, running largely on OpenAI models, and is on track to spend more than US$1 billion a year on Microsoft’s AI and cloud services, people familiar with the matter told Bloomberg . Ant Group, Meituan and Tencent also buy AI models through Azure, though Ant says it develops its own models and that its core products do not rely on outside systems. Inside Microsoft, the growth has been celebrated rather than played down. Azure’s AI revenue in China expanded faster than in any other sales territory, roughly tripling in the financial year to June 2025 after climbing about 400% the year before, then-chief commercial officer Judson Althoff told staff at a July 2025 sales meeting, according to a transcript reviewed by Bloomberg . Althoff described Microsoft as the one company “bringing those two places together,” meaning the AI hubs of the US West Coast and China’s east. President Brad Smith has separately told US lawmakers that the China business accounted for roughly 1.5% of the company’s revenue in 2024. Why OpenAI models in China run through Microsoft alone The reason comes down to Microsoft’s singular contract with OpenAI, which lets it set its own terms for selling GPT models abroad. Both OpenAI and Anthropic have declined to sell into China directly, and Anthropic’s models are absent from Microsoft’s China line-up altogether. That leaves Microsoft acting as the intermediary for models whose makers have decided the Chinese market is too risky to serve. Risk is the recurring tension. OpenAI has privately pressed Microsoft to do more to stop Chinese customers from “distilling” its models, Bloomberg reported, a technique that uses one model’s outputs to train another. Microsoft points to automated monitoring and a rule that it sells only to established companies rather than individual developers. Yet sources told Bloomberg that Chinese buyers face no heightened scrutiny, and synthetic data generated from the models is difficult to police. To limit its exposure, Microsoft does not host the OpenAI models on Chinese soil; customers reach them over the internet from data centres elsewhere, Singapore among them. The contradiction sharpens when you look at what Microsoft hosts alongside GPT. It added DeepSeek’s R1 to Azure AI Foundry in January 2025, and this month confirmed to Axios that it is testing a fine-tuned, Azure-hosted version of DeepSeek-V4 as a cheaper option for Copilot Cowork, the enterprise agent currently powered by OpenAI and Anthropic models. So Microsoft is selling a Chinese model into Western businesses while selling American models into Chinese ones, taking the margin on both legs of the trade. Whether the balancing act survives the politics is another matter. The China business is contentious in Washington, where lawmakers have cast the country’s AI push as a threat to American industry, and OpenAI’s private objections could grow louder. For now, Microsoft owns the market for OpenAI models in China, and it is the only player being paid by both sides. See also: China’s DeepSeek V3.2 AI model achieves frontier performance on a fraction of the computing budget Want to learn more about AI and big data from industry leaders? Check out AI & Big Data Expo taking place in Amsterdam, California, and London. The comprehensive event is part of TechEx and is co-located with other leading technology events, click here for more information. AI News is powered by TechForge Media . Explore other upcoming enterprise technology events and webinars here . The post Microsoft sells OpenAI models in China. OpenAI and Anthropic won’t. appeared first on AI News .