Microsoft has reportedly asked its cloud computing and AI employees in China to consider relocating due to Washington's crackdown on Beijing's access to advanced technology.

Microsoft Offering An Optional Transfer to Chinese-Based Staff

According to unnamed sources, the Wall Street Journal reported on Thursday that Microsoft has offered its mostly Chinese engineering staff the chance to transfer to countries like the US, Ireland, Australia, and New Zealand.

According to one individual, the employees, including those from the Azure cloud computing team who were informed earlier this week, have until June 7 to make a decision or to remain with the China team. Headquartered in Redmond, Washington, the tech giant maintains offices in Beijing, Shanghai, and Suzhou, located in the eastern Jiangsu province, where it has also halted hiring.

Microsoft extended the relocation offer to around 700 to 800 machine learning and cloud computing employees. According to one source cited by the WSJ, CNBC was unable to independently verify the report.

In a statement to CNBC, a Microsoft spokesperson confirmed that the company had offered an optional internal transfer opportunity to a subset of employees but did not provide details on the number or affiliation of the staff affected. The spokesperson emphasized that Microsoft remains committed to the region and will continue its operations in this and other markets where it has a presence, noting that the potential transfers would not impact operations.

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China's Threat to Training AI Models

Microsoft employs around 7,000 engineers in its Asia-Pacific research and development division, with most of this workforce in China. The move is part of US efforts to prevent China, over the past two years, from limiting its ability to purchase and develop advanced chip-making equipment necessary for training AI models that could be used for military purposes.

US-China Tension Over AI Regulation

Recent reports indicate that the Biden administration is now seeking to implement new guardrails on the export of advanced AI models, including the large language model that powers Microsoft-backed ChatGPT.

Currently, limited government oversight prevents companies like Microsoft, one of the most prominent players in cloud computing and AI in the US, from selling or providing AI model services to foreign entities. The US reportedly has concerns that AI models, which analyze extensive data to generate content, could be utilized for cyber attacks or the creation of biological weapons.

Microsoft released a report earlier this year indicating that state-backed hackers from Russia, China, and Iran had been utilizing tools from OpenAI to refine their skills and bolster their hacking efforts. Even as other Western tech firms faced challenges due to stringent regulations, Microsoft has maintained a significant presence in China for over three decades, hosting its most extensive research and development (R&D) center outside the US.

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