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Microsoft scales back China footprint as geopolitical and tech risks rise
Microsoft said China was 1.5% of global revenue in 2024, and executives weighed quitting the market in 2023 before deciding to stay.
Microsoft has moved toward a strategy of retreat in China, with multiple branch offices and joint ventures shut over the past five years, according to a Reuters report that cited corporate filings and company sources.
The report says some Microsoft executives considered exiting the Chinese market in 2023, arguing it carried too much geopolitical risk for limited economic return, even as the company said it has no current plans to leave.
Reuters reports that China has promoted domestic software since 2017, a push Beijing frames as security-driven, while U.S. export controls have constrained efforts to scale Microsoft’s AI and cloud businesses in China.
Microsoft ultimately remained, the outlet said, because it had built a profitable business servicing Chinese companies such as ByteDance, which relies on Western technology to manage overseas operations, and because it wanted to maintain access to China’s engineering talent.