Microsoft Shuts Down China AI Lab – but Keeps Other Ties to Communist Government

Microsoft has recently closed its Shanghai AI lab while facing criticism for its extensive technology partnerships with China despite positioning itself as a defender against Chinese tech dominance.

According to a report by the South China Morning Post, Microsoft shut down its  IoT & AI Insider Lab in Shanghai. Although Microsoft has not commented on the closure, reporters observed its office was empty. When the AI lab was launched in 2019, CCP officials touted, “The lab will help professionals from related enterprises to develop multi-field integration and make full use of scientific research resources in Microsoft and Zhangjiang.” Zhangjiang is an area in Shanghai with many tech companies.

Microsoft and its subsidiary OpenAI have argued that the way to take China seriously is to deregulate and subsidize American Big Tech, particularly Microsoft. In a Washington Post Op-Ed on how to best compete against China on AI published last July, OpenAI boss Sam Altman claimed that a “Democratic vision for artificial intelligence must prevail over an authoritarian one.” His solution: “Public-private partnerships to build this needed infrastructure will equip U.S. firms with the computing power to expand access to AI and better distribute its societal benefits.” Altman even suggested that OpenAI and Microsoft would serve as the base of America’s industrial economy.

On January 3, 2025, Microsoft President Brad Smith called on the Trump administration to support Microsoft’s plan to take on China in AI. Smith wrote that this would require “a partnership that unites leaders from government, the private sector, and the country’s educational and non-profit institutions.”

Yet apart from shutting down one lab — which was opened long after China’s threat to America was widely known, Microsoft has largely been helping the CCP:

• Microsoft opened its first central AI lab in China in 1998. In 2018, Microsoft claimed to have invested over $1 billion in AI research in China. Sen. Josh Hawley (R-MO) said the U.S. “should block partnerships like this.”
• While OpenAI made considerable noise when it announced that it was closing off its APIs to Chinese users last July, it allows Chinese commercial clients, notably TikTok’s parent company ByteDance, to use it by buying Microsoft Azure.
• The Free Beacon reported that Microsoft and its “Media Smart Cloud Innovation Technology Laboratory” helped the official CCP state-run media outlets China Daily and People’s Daily develop an “artificial intelligence bot specially designed to be controlled and censored by the Chinese Communist Party.”
• Microsoft Research Asia partnered with the Chinese military’s National University of Defense Technology to research facial recognition technology China used for its surveillance state and even to recognize Uighurs. Then Senator Marco Rubio called this “deeply disturbing” and “an act that makes them complicit.”
• Microsoft incubated Chinese start-ups used to build the Chinese surveillance state and also engage in Government Censorship.

As the Foundation for Freedom Online noted in a recent report on How Microsoft Helped Build The Censorship Industry, Microsoft Board Member Reid Hoffman helped fund fake Hamilton 68, a project of former Deep State operative Clint Watts that created pro-Trump bots and then claimed they were Russian-created. After the project was exposed, Watts became a Microsoft Executive.