Microsoft Azure China offers Chinese businesses a loophole to OpenAI’s departure

Although OpenAI is technically cutting off China and businesses are scrambling to find an alternative, they may not need to do so. According to a report on The Information, Microsoft has confirmed there is a loophole allowing access to OpenAI’s models using its Azure cloud service.

When OpenAI made its surprise announcement that it would leave the Chinese market effective July 9, companies reliant on the generative and conversational AI models began searching for alternatives. OpenAI had officially prohibited the use of its technology for some time, but developers used VPN services to mask that they were in China and access the models.

After OpenAI announced it would cut off access even to those using VPNs, local Chinese companies began trying to fill the void. Tech companies like Tencent, Baidu, and Alibaba started moving into the market with “migration” plans and discounts. Zhipu, a Chinese large language model (LLM) firm, announced an offer that included training, consulting services, and tokens similar to those used by developers to access OpenAI’s API.

It turns out these alternatives may not be truly necessary yet, thanks to a Microsoft service. Microsoft Azure China, operated as a joint venture with local tech firm 21Vianet, continues to offer OpenAI models. The day after OpenAI announced it would crack down on access to its models from Chinese customers, Microsoft China used its official WeChat account to encourage developers to move their work over to Azure OpenAI.

Microsoft contracts with OpenAI to provide the startup’s LLM and other models. Under the terms of the agreement OpenAI has with Microsoft, it gets 20% of any revenue Microsoft generates through selling OpenAI services. Three Azure China customers confirmed to The Information that they still have access to OpenAI’s models.

Of course, Microsoft’s Azure OpenAI offerings will likely intensify scrutiny of the company by U.S. officials. The U.S. government hopes to cut China off from advanced U.S. technology like AI altogether, fearing China might use artificial intelligence to boost its military capabilities. That’s led to tough questioning of Microsoft by such bodies as the House Homeland Security Committee.

The U.S. government’s national security concerns have recently led to a bipartisan bill to try to make it easier to block U.S. companies from selling AI to China. If that bill is signed into law, it’s difficult to say how much longer even Microsoft will be able to keep providing OpenAI services to customers in China.