Microsoft CEO Nadella says company isn’t focused on China domestically

Microsoft is not focused on China as a domestic market, though the company has notable Chinese customers with operations outside the world’s second most-populous country, CEO Satya Nadella said on Wednesday.

“We are mostly focused on the global market ex-China,” Nadella told CNBC’s Jon Fortt during Microsoft’s Ignite conference in Seattle. “A lot of the Chinese multinationals operating outside of China are our bigger AI customers, perhaps.”

Microsoft provides artificial intelligence services to electric vehicle maker Li Auto and consumer electronics company Xiaomi, among others.

Nadella’s remarks come as business leaders gather in San Francisco alongside U.S. President Joe Biden and China’s President Xi Jinping. The world’s two biggest economies have a fraught business relationship, particularly when it comes to technologies like networking equipment, semiconductors and internet services. In October the U.S. Commerce Department said it would impose additional export restrictions on AI chips for China.

Microsoft has a more visible presence in China than some of its peers. Meta’s Facebook and Instagram apps don’t officially work in China, nor does Google’s search engine. Amazon closed its online marketplace in China in 2019.

According to Microsoft’s web page about its presence in China, the company has operated there since 1992, including through its largest research and development center outside the U.S. The Bing search engine has been accessible in China since 2009.

For a few months this year, following the launch of an AI chatbot in Bing, it became the top desktop search engine in China. However, Beijing-based Baidu has since reclaimed leadership, according to StatCounter data. Earlier this week, Microsoft’s advertising division announced a partnership with Baidu.

Still, Nadella acknowledged on Wednesday that the U.S. government has important restrictions to follow when it comes to doing…