Microsoft has spent years retreating from China. AI may be a reason it does not leave entirely.

Reuters reports that the company has closed at least 15 offices and joint ventures in China and came close to executing a complete exit in 2023, as geopolitical tensions, tighter Chinese technology policies, and U.S. export controls have made the market increasingly difficult to serve.

However, Microsoft has found a narrower opportunity in the same market: selling Azure cloud and AI services to Chinese companies with international operations, including ByteDance.

That shift changes what Microsoft’s China strategy looks like. Rather than trying to remain a major foreign software provider in China’s domestic market, Microsoft is increasingly using its cloud platform and access to Western AI models to serve Chinese companies that need technology for their businesses outside the country.

That business model, too, isn’t entirely immune to the problems that led the company to want to leave, leaving Microsoft in an unusually sensitive spot.

Microsoft is facing pressure from two sides

Microsoft’s office closures are not just about reducing physical presence; they reflect a business that has become harder to justify as Microsoft’s traditional software market in China shrinks.

The country accounted for only about 1.5% of Microsoft’s global revenue in 2024, according to Reuters. That means Microsoft is being asked to bear significant geopolitical, regulatory, and operational risks for a relatively small share of its worldwide business.

Beijing already has a growing preference for domestic technology. Chinese government agencies have been encouraged to replace foreign software with Chinese alternatives. Microsoft’s own attempt to build a China-specific version of Windows for government customers also did not translate into measurable adoption.

What is equally important is the squeeze from Washington. U.S. export controls on advanced chips and AI technology have restricted what Microsoft can provide to Chinese customers and what its China-based engineers can access.

Reuters says those restrictions have also affected Microsoft’s research operations, with the company having to move some researchers outside China.

The problem is that U.S. restrictions can also strengthen the very domestic technology push that is hurting Microsoft. Beijing has also tightened restrictions to foreign businesses.

In other words, U.S. controls may directly limit Microsoft’s business in China while also giving Chinese companies and policymakers another reason to reduce their dependence on foreign technologies like Microsoft’s.

More Microsoft news

AI gives Microsoft a narrower path in China

AI and cloud services give Microsoft a reason to preserve part of its China business, but analysts have questioned how durable that opening is.

Microsoft relies on third-party AI providers, meaning a change in U.S. or AI providers’ access-to-China policy could quickly weaken one of the reasons customers use Azure.

There is another problem: the same push for domestic technology that hurt Microsoft’s traditional software business also applies to AI. Chinese companies have increasingly capable homegrown models, giving them another reason to avoid foreign providers.

That is where companies such as ByteDance and Shein become particularly important. They operate internationally and often require AI and cloud infrastructure to serve global markets. That makes Microsoft’s Azure and access to Western AI models an attractive alternative.

The old global tech playbook is breaking down

Microsoft’s China strategy shows how geopolitical tensions are moving beyond policy documents into corporate operating decisions. The company has reduced its footprint while keeping selected businesses alive, even as a Reuters source stressed there are no definitive plans to leave China.

For other multinationals, that could become the new playbook: Stay where the business still works, reduce exposure where politics raises the cost, and build around a technology environment that is increasingly split along national lines. How that plays out in the long run remains to be seen.

Other Microsoft News: The company is merging its separate Microsoft 365 Copilot and Copilot apps into a more unified experience as it continues consolidating its growing lineup of AI tools.

AI coding startup Cursor is now officially a part of SpaceX, according to an announcement on the Cursor blog.

Elon Musk’s SpaceX — which also acquired Musk’s xAI earlier this year — announced a deal in April for the companies to develop technology together; the deal also gave SpaceX the option to acquire Cursor for $60 billion. Two months later, as SpaceX became a public company, the companies said they were moving forward with the acquisition.

In its announcement that the deal has closed, Cursor repeatedly referenced SpaceX’s computing infrastructure, which the company has been renting out to customers including Anthropic and Google. (SpaceX also faces a lawsuit over the pollution created by its data center gas turbines.)

Cursor said that by becoming part of SpaceX, it will have “access to the largest fleet of GPUs in the world.”

“SpaceX is building the computing capacity needed to scale intelligence far beyond what exists today,” the company added. “Cursor will be one place where that intelligence becomes useful.”

Just like any other online service, hackers can target and break into your accounts on popular AI platforms such as ChatGPT, Claude, and Perplexity. 

TechCrunch has created a comprehensive guide to help you protect yourself if you suspect someone has broken into your account on one of the internet’s most popular platforms, social networks, or messaging apps. Now, we’re here to show you how to check whether your accounts on AI platforms have been hacked.

As usual, we recommend using unique passwords stored in a password manager, and turning on multi-factor authentication (MFA), so that even if someone steals your password, they won’t be able to log in without that second piece of information. 

ChatGPT and Perplexity offer MFA. Claude doesn’t, because instead of asking for a password, Anthropic’s AI chatbot sends a login link to your email address.

All three of these AI platforms offer similar ways to check if there’s a suspicious device logged into your account. Here’s exactly how each platform works.  

ChatGPT

To find out if someone has broken into your ChatGPT account, open it on your computer’s browser, click on your username in the bottom left corner, go to “Settings,” then “Security and Login,” and finally click on “Active Sessions.” 

You will see where you are logged into your ChatGPT account. If you see any device you don’t recognize, you can log out of that single device. You can also click on “Log out all.”

At this point, if you want to change your password, you need to log out of your account. 

Then, on ChatGPT’s website, click “Log in” located in the bottom-left corner, enter your email address, click on “Forgot password,” and then “Continue.”  

ChatGPT will then send you an email containing a six-digit code. Enter the code on the ChatGPT login page, click “Continue,” and then enter a new password. 

You can also click “reset your password” in the email you received to see the official instructions on how to do that. 

Claude

For Claude, open it in your computer’s browser, click on your username in the bottom-left corner, then “Settings,” and click on “Account.” That’s where you will see your “Active sessions.” 

If you don’t recognize one of them, hover over it, click on the three vertical dots that appear on the right, and click “Log out” or “Terminate.”

If you want, you can click on “Log out of all devices.” 

At that point, you’ll be able to log back into your account using your email address. You will receive an email with a link to log in. Claude does not allow you to use passwords at all, so there’s no password to change.

Perplexity

In the case of Perplexity, the AI-powered search engine does not show you where you are logged in. 

So if you’re worried someone may have broken into your account, go to Perplexity in your browser and click your username in the bottom-left corner, then “All settings.” Finally, click on “Sign out of all sessions,” and then “Confirm.”

At that point, you can log back in by entering your email address. You will then receive an email with a unique six-digit code. Enter the code on the website to log in, or click on the “Sign in” button in the email to log in directly.