Microsoft's AI Models Remain in China Despite OpenAI Ban!

Key Takeaways:

Microsoft Azure provides Chinese users access to OpenAI’s AI models despite OpenAI’s API ban.
OpenAI’s API restriction in China started on July 9th, 2024.
The Azure service allows for custom AI integrations, expanding AI capabilities for Chinese enterprises.
US chip restrictions challenge the training of local Chinese AI models.

Even though OpenAI is taking steps to restrict access to its platform in China, a fresh report claims that users can still access the firm’s products using Microsoft’s Azure cloud computing platform.

Microsoft and OpenAI have a close partnership, which has allwed the former to gain unparalleled access to its products in the bid to expand enterprise computing through artificial intelligence features.

So, defacto, there’s no real ban ?

— Martine D’Hondt (@martine2_d) July 8, 2024

The latest report comes from The Information, which claims that it has talked with multiple Chinese customers who can use OpenAI’s conversational AI models.

Workaround via Microsoft Azure

Today’s report follows OpenAI’s announcement late last month that it would restrict Chinese customers from using its API starting July 9th.

Unlike ChatGPT, which is a finished end product offered by OpenAI and its partners, the firm’s API allows customers to use OpenAI’s technologies to develop their own products.

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Essentially, it allows them to layer additional software over OpenAI’s program to create use case-specific products that ChatGPT cannot cater to.

According to the publication, it confirmed with three Chinese businesses “that they have access to OpenAI’s models.”

Azure OpenAI Services

Microsoft’s Azure OpenAI enables users to integrate their data and run custom queries with artificial intelligence language and image models.

Along with OpenAI, it also offers products from Facebook’s parent Meta as part of its artificial intelligence portfolio for a diverse, off-the-shelf, customizable AI platform.

After OpenAI’s announcement last month, Microsoft confirmed that it would continue to offer Azure OpenAI services to users in Hong Kong.

👌. Honest competition !!!

— Martine D’Hondt (@martine2_d) July 8, 2024

OpenAI remains unsupported in Chinese territory and mainland China; by the looks of it, Microsoft has adopted a policy similar to that of its Hong Kong operations on the mainland.

OpenAI pays Microsoft to offer its services on Azure, and it also pays a commission to the software giant out of its API revenue. Reports have also indicated that Microsoft has a right to the lion’s share of OpenAI’s profits until the latter can pay back its investor’s multi-billion dollar investment.

Condition in China

Government Control: OpenAI’s popular chatbot service ChatGPT is already banned in China, where authorities exercise strict control over the public’s access to information. Chinese residents cannot access ChatGPT without workarounds as part of the government’s efforts to control what it deems as propaganda.
Local AI Industry: At the same time, the government has also approved more than a hundred local large language models in a bid to develop a local AI industry. However, given the US’s extensive chip restrictions, which also target AI chips, training these models should prove to be difficult for Chinese companies.
NVIDIA’s Role: Models such as ChatGPT require tens of thousands of the latest GPUs for their processing power, and a large portion of NVIDIA’s $3.15 trillion market capitalization hinges on its products being industry leaders in AI performance.

By leveraging its Azure cloud platform, Microsoft provides a huge workaround to OpenAI’s ban on API access in China, allowing continued use of OpenAI’s AI models.

This move highlights the strategic importance of the Chinese market and underscores the challenges in regulating AI technology distribution globally.

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