Microsoft Debates What to Do With A.I. Lab in China

Amid U.S.-China tensions, the company has faced questions over whether operating an advanced research lab in Beijing is politically tenable.

When Microsoft opened an advanced research lab in Beijing in 1998, it was a time of optimism about technology and China.

The company hired hundreds of researchers for the lab, which pioneered Microsoft’s work in speech, image and facial recognition and the kind of artificial intelligence that later gave rise to online chatbots like ChatGPT. The Beijing operation eventually became one of the most important A.I. labs in the world. Bill Gates, Microsoft’s co-founder, called it an opportunity to tap China’s “deep pool of intellectual talent.”

But as tensions between the United States and China have mounted over which nation will lead the world’s technological future, Microsoft’s top leaders — including Satya Nadella, its chief executive, and Brad Smith, its president — have debated what to do with the prized lab for at least the past year, four current and former Microsoft employees said.

The company has faced questions from U.S. officials over whether maintaining an 800-person advanced technologies lab in China is tenable, the people said. Microsoft said it had instituted guardrails at the lab, restricting researchers from politically sensitive work.

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