Microsoft (MSFT, Financial) is implementing significant strategic changes in China, appearing as a "complete withdrawal" amid global tech industry upheavals and U.S.-China tensions. The company has restricted GitHub access, conducted large-scale layoffs, closed physical stores, and stopped certain authorizations to Chinese enterprises. Additionally, Microsoft has moved its AI team and ended joint ventures, reflecting tougher decisions due to geopolitical strains.
This year, Microsoft blocked Chinese IPs on GitHub, which, despite later explanations as a configuration error, signaled its retreat. The company closed all physical stores in China last year, maintaining only its online presence. In April, large layoffs of outsourced staff and the termination of cooperation with Shanghai Weichuang Software further underscored its strategic shift.
Microsoft's withdrawal follows the expiration of Windows licensing for Huawei PCs and the sudden deactivation of Microsoft 365 accounts for certain Chinese institutions. The company has also relocated its Chinese AI team, closing its Shanghai AI and IoT lab. These moves reflect an attempt to consolidate its talent and resources in areas with higher growth potential, aligning with its focus on AI and cloud computing.
Driven by U.S. policies to curb tech collaborations with China, Microsoft's adjustments highlight broader industry fragmentation fueled by geopolitical pressures and evolving market strategies.
