Microsoft CEO Satya Nadella speaks to on November 15, 2023.
Microsoft CEO Satya Nadella said on Wednesday that the focus is not on China as a domestic market, although the company has notable Chinese customers with operations outside the world’s second-most populous country.
“We’re mostly focused on the global market other than China,” Nadella told John Forte during Microsoft’s Ignite conference in Seattle. “A lot of Chinese multinationals that operate outside of China are probably our big AI customers.”
Microsoft provides artificial intelligence services to electric vehicle maker Li Auto and consumer electronics company Xiaomi, among others.
Nadella’s comments come as business leaders gather in San Francisco with US President Joe Biden and Chinese President Xi Jinping. Trade relations between the world’s two largest economies are strained, especially when it comes to technologies such as networking equipment, semiconductors and Internet services. In October the US Commerce Department said it would impose additional export restrictions on AI chips to China.
Microsoft has a more visible presence in China than some of its competitors. of meta Facebook and Instagram apps do not and do not officially work in China Google’s Search engine. Amazon shut down its online marketplace in China in 2019.
According to Microsoft’s web page about its presence in China, the company has been operating there since 1992, with the Bing search engine available in China since 2009 through its largest research and development center outside the US.
For a few months this year, after the launch of an AI chatbot in Bing, it became the top desktop search engine in China. However, Beijing based Baidu According to StatCounter data, it has regained the lead. Earlier this week, Microsoft’s advertising division announced a partnership with Baidu.
Still, Nadella acknowledged on Wednesday that the US government faces significant restrictions when it comes to doing business in China.
“It’s clear that the United States has a particular set of policy decisions that they’re taking on both the meaning of trade and competition and national security,” Nadella said. “Obviously, we are subject to the USG’s decision” and will comply with it, he said.
More than half of Microsoft’s sales in the third quarter came from US customers. The US government uses Microsoft Azure cloud services and Microsoft 365 productivity apps.
Although Microsoft is not dependent on China for much revenue, the company does rely, in part, on China to manufacture its Surface PC.
“At least for us, today, most of our business is in the United States and Europe and the rest of Asia, and so we don’t see it as a major, major issue for us, quite frankly, other than that,” Nadella said. Said, “Any disruption in the supply chain.”
Microsoft has recently faced some challenges in China.
In August, LinkedIn ceased operation of its InCareer app for professional users in mainland China, citing “intense competition and the challenging macroeconomic environment”. The move comes two years after Microsoft announced plans to shut down localized versions of its core apps for users in China.
Last year, China reportedly told its government agencies and government-backed companies to import PCs from foreign countries and replace them with machines made domestically and running local operating systems. This happened when Microsoft developed a special version of its Windows 10 operating system for the Chinese government.
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