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Microsoft is debating what to do with its AI lab in China

Microsoft is debating what to do with its AI lab in China

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

The company hired hundreds of researchers for the lab, which marked the beginning of 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 AI laboratories in the world. Bill Gates, co-founder of Microsoft, called This is an opportunity to tap China's “deep reservoir of intellectual talent”.

But as tensions rise between the United States and China over which country will lead the world's technological future, Microsoft's top leaders — including its Chief Executive Officer Satya Nadella and its Chairman Brad Smith — have There has been debate about what to do with this prized laboratory. At least in the last year, four current and former Microsoft employees said.

The company has faced questions from U.S. officials about whether it makes sense to maintain an 800-person advanced technology lab in China, the people said. Microsoft said it had installed guardrails in the lab, restricting researchers from politically sensitive tasks.

The company, which is based in Redmond, Washington, said it has also opened a laboratory outpost in Vancouver, British Columbia, and will transfer some researchers from China to that location. The two people said the outpost is a backup if more researchers need to move. The four people said they have considered closing or relocating the lab, but Microsoft leaders support keeping it in China.

“We are as committed as ever to this team's lab and world-class research,” Peter Lee, who leads Microsoft Research, a network of eight labs around the world, said in a statement. Using the lab's formal name, he said, “There has been no discussion or advocacy to close Microsoft Research Asia, and we look forward to continuing our research agenda.”

The debate over Microsoft has erupted because the company is one of the few major US tech companies to have a foothold in China, along with Apple and Tesla. As China boosted its domestic tech industry and geopolitical tensions with the United States increased, American companies like Google reduced their presence there. Facebook and other American social media sites like X have been blocked in China for years.

LinkedIn, which is owned by Microsoft, shut down its professional social network in China in 2021, citing increasing compliance demands. But Microsoft has maintained its Bing search engine as the only foreign search engine in China, although it is heavily censored, and it offers its Windows operating system, cloud computing and applications for corporate customers there.

Five people with knowledge of the situation said Microsoft has debated the future of the lab for several years. It has become the target of national security concerns amid the rise of AI and increasing aggression between the United States and China. The hypothetical risk is that China could hack or otherwise infiltrate the lab, or its researchers could leave Microsoft and join Chinese companies that work closely with the government, the people said.

Two people familiar with the conversations said the Biden administration privately asked Microsoft about the lab when drafting a ban over the past two years on new U.S. investment in companies that manufacture sensitive technologies in China, which is used by Beijing. Can do to increase his army. (The proposed rules released in August are not yet final.)

Senators asked Mr Smith about Microsoft's ties to China Subcommittee hearing on AI in September. He said the country's share in Microsoft's sales is 1.5 percent, which was $212 billion in the last financial year.

Chris Miller, author of “Chip War,” a book that tracks the geopolitical history of the technology, said Microsoft faces “a tricky balance.” “They need to consider where confidence in the political system is going.”

The White House declined to comment.

Microsoft's lab in Beijing was born when Mr. Gates hired Kai-Fu Lee, a Taiwan-born AI researcher, to build the operation. (Dr. Lee later left to join Google and now runs a venture capital firm.)

Researchers at the laboratory, many of whom were at the top of their fields, discovered technologies such as speech recognition, computer vision and natural language understanding, which are cornerstones in the development of artificial intelligence. Some of the lab's researchers went on to lead positions at Chinese tech giants like Alibaba, Baidu and Tencent or helped found start-ups like Megvii, the facial recognition company that has contributed to a vast national surveillance system in the country.

In 2018, Microsoft said it had Invested over $1 billion In research and development in China in the last decade. The technical brilliance and inventions of the Beijing laboratory underpin a major internal argument for its support.

But the lab's success and reputation have also drawn the attention of Washington, where the White House has restricted China's access to critical technologies, citing national security.

Microsoft leaders have discussed how to manage the stress. People with knowledge of the matter said Mr. Gates, who is still in regular contact with company executives and supports global engagement, has long supported the Beijing lab. He traveled to China in June and met with President Xi Jinping, who told him he was “the first American friend he met this year.”

Microsoft's technology and research leaders, including chief technology officers Peter Lee and Kevin Scott, also support the lab, arguing that it has produced important technological breakthroughs, the two people said. Mr. Smith also supports the laboratory.

“The lesson of history is that countries succeed when they learn from the world,” Mr. Smith said in a statement. “While guardrails and controls are important, engagement is critical.”

In recent years, Microsoft has limited what projects researchers can work on in China, people with knowledge of the matter said. Last time, researchers in China were not allowed to join small Microsoft teams that had early access to GPT-4, an advanced AI system developed by Microsoft partner OpenAI, he said.

Microsoft said work related to quantum computing, facial recognition and synthetic media is also banned in the lab. The company has also banned students and researchers from universities affiliated with China's military or from working with them.

(The New York Times sued OpenAI and Microsoft last month for copyright infringement over the training of its AI systems.)

At the lab's outpost in Vancouver, researchers can get free access to the computing power needed for cutting-edge research and critical technologies, including the OpenAI system, two people familiar with the lab said.

kate conger Contributed reporting from San Francisco.



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