SHANGHAI (Reuters) – Microsoft Corp (MSFT.O) has emerged as the most likely buyer of the US operations of TikTok, the popular Chinese short video app that prepares US President Donald Trump for effective bans on national security grounds.
PHILO PHOTO: A person walks past a Microsoft logo at the Microsoft office in Beijing, China on August 4, 2020. REUTERS / Thomas Peter
A deal would be in line with Microsoft’s stance towards China where the company has a large presence – unlike other US technical heavyweights such as Facebook Inc (FB.O) and Alphabet Inc’s (GOOGL.O) Google who seem to be giving up on China’s consumer-oriented market with its miscellany of government controls.
The country earns more than $ 2 billion in annual revenue, Microsoft President Brad Smith said earlier this year.
WHAT DOES MICROSOFT DO IN CHINA?
Microsoft employs about 6,000 people in the country, with offices in Shanghai, Beijing and Suzhou.
The flagship Windows operating system is widely used, although revenue has long been shrunk by piracy. In recent years, the company has shifted its Azure cloud computing product, launched in 2013 through a partnership with local data services company 21Vianet.
China’s cyber security law restricts Microsoft from providing Azure software and services, while 21Vianet operates associated data centers. It is a small player in a sector dominated by local providers Alibaba Group Holding Ltd (BABA.N), Baidu Inc (BIDU.O), Tencent Holdings Ltd (0700.HK) and Huawei Technologies Co Ltd.
Microsoft operates both its Bing search engine and LinkedIn social network in China, although again it is a small player compared to local giants.
China’s most important operation is probably Microsoft Research Asia, renowned as a leader in artificial intelligence (AI).
Founded in 1998 with the help of renowned Taiwanese-American AI scientist Kaifu Lee – who continued with Google’s China office – the lab has produced alumni who went to administrators at TikTok owner ByteDance, Baidu, Xiaomi Corp (1810.HK) and Chinese unicorns for face recognition.
ARE MICROSOFT SELF-SENSORS IN CHINA?
Bing and LinkedIn in China appear similar to their global counterparts, but Microsoft censors search results and content that the Chinese government considers sensitive.
At China’s launch in 2014 in LinkedIn, two years before the company was acquired by Microsoft, then-Chief Executive Jeff Weiner said censorship content would be “necessary” for the company to grow in the country.
In 2019, free speech advocates criticized LinkedIn’s position on censorship, after human rights activist Zhou Fengsuo said his profile was not visible in China. LinkedIn blamed an ‘error’ and restored its visibility.
Software development website GitHub, which Microsoft bought in 2019, is also accessible from China. The site, an encryption repository, was used by activists in China to preserve Internet content before authorities censored the source.
HIS MICROSOFT SUPPORT WITH THE GOVERNMENT OF CHINA?
Microsoft has complained for decades about known piracy of Windows in China and has occasionally filed lawsuits and complaints even against state-sponsored companies to address their concerns.
The most notable conflict with the government was in 2014 when authorities at four Microsoft offices fought over access to contracts and other information as part of an anti-trust investigation.
That same year, the government called on all agencies to ban the purchase of Windows 8 with security instructions.
Microsoft eventually released a “China Government” release of Windows 10 following a joint venture established in 2015 with state-owned China Electronics Technology Corp.
WHAT ABOUT BILL GATES?
Microsoft co-founder Bill Gates has spoken in most positive terms in recent years. In November, he held a public meeting with Peng Liyuan, wife of President Xi Jinping.
Also late last year, Gates criticized the U.S. government’s restrictions on maker of telecommunications equipment Huawei and talked about sharing Windows source code with the Chinese government that helped the official acceptance of the software into the country.
He praised China’s response to COVID-19, which he publicly deserved from Xi, and the Bill & Melinda Gates Foundation donated $ 5 million to China for COVID-19 relief.
The foundation is one of the few overseas charities as non-governmental organizations to conduct operations in China, where it has collaborated with the government and academic institutions against diseases such as malaria and tuberculosis.
Report by Josh Horwitz; Edited by Christopher Cushing
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