Nadella commented that Microsoft is not centered around China as a market, but participates in deals with Chinese companies that are not based in the country. Amid reports of the Chinese government urging organizations and state-backed companies to move away from the Windows platform, the CEO explained to Fortt from CNBC while at Microsoft's Ignite event in Seattle, that the tech giant is largely focused on the international market and does not take China into account.
Although Microsoft does not consider China as part of its domestic market, the company has customers based in the country operating outside of it. CEO Satya Nadella remarked Wednesday at Microsoft's Ignite conference in Seattle that "We are mostly focused on the global market ex-China." He added that a number of Chinese multinationals are prominent AI customers of the firm, such as Li Auto and Xiaomi.
President Joe Biden and China's President Xi Jinping are gathering in San Francisco this week for a meeting, as tensions between the two largest economies are increasing due to technological developments such as networking equipment, semiconductors and internet services. The U.S. Commerce Department announced extra export restrictions for AI chips to China in October.
Microsoft has had presence in the nation since 1992 and the Bing search engine has been available there since 2009. A few months ago, it became the most-used desktop search engine in China, but Beijing-based Baidu regained the lead. This week, Microsoft advertising division tied up with Baidu.
While Nadella mentioned USG's restrictions for trading with China, nearly half of Microsoft's sales come from the U.S. This is partially because the U.S. government uses Microsoft 365 productivity apps and Azure cloud services.
However, despite the company's existing relations with China, it recently encountered some difficulties such as choosing to end its InCareer app in August and ceasing operations of its main app for users in the country two years prior. Additionally, China reportedly ordered its state-affiliated companies and agencies to replace PCs from foreign countries with domestic machines.
Nadella noted that there could be disruption to supply chain but he reiterated that the majority of Microsoft's revenue comes from U.S. and Europe. He further added that Microsoft does not consider China as a major market.
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