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The Antitrust Case Against the Microsoft Acquisition of Activision is Big. The National Security Dangers from China Enabled by the Deal are Bigger.

For over three decades, Microsoft has supplied all levels of the Chinese government with AI tech used for surveillance.

Jul 10, 2023


  • While Bill Gates may no longer sit on Microsoft’s board, his cozy relationship with China and President Xi Jinping goes back decades.
  • China’s approval of the Microsoft-Activision Blizzard merger wasn’t surprising for those following Microsoft’s three decades of investing heavily in China and supplying all levels of the government with AI tech used for surveillance.
  • Microsoft’s AI development with China was put under the microscope in the U.S. Senate Committee hearing on Artificial Intelligence and Human Rights following a question asked by Sen. Marsha Blackburn about U.S. companies providing technology to help the CCP surveil citizens in China.

Last week, the Federal Trade Commission sued Microsoft to stop the tech behemoth’s $69 billion purchase of gaming powerhouse Activision Blizzard, citing the massive antitrust issues at the heart of one of the biggest proposed consumer technology deals in history.

While regulators are rightly focused on the devastating impact the deal between the Xbox gaming console creator and the video game maker of such popular titles as World of Warcraft and Call of Duty could have on competition, a lesser-noticed story reported last week about a new danger from Microsoft in China should raise even more red flags about the threats the deal could pose to U.S. national security.

As the Financial Times reported, Microsoft is quietly moving some of its top experts on artificial intelligence from China to Canada, over backlash that its Beijing-based Microsoft Research Asia institute continues to partner with the Chinese military on AI research being used for surveillance and censorship in China while undermining the U.S. and its allies.

Microsoft can’t be happy with the timing of this leak because it’s a stark reminder to US lawmakers, at a time of growing tensions between the U.S. and China, of the dark role that Microsoft has played in support of systematic repression and human rights abuses in China, including:

  • They’re training America’s adversaries. Microsoft is responsible for training the Chinese government’s best AI engineers, all of whom have U.S. companies in the cross hairs. Microsoft likes to brag that it’s had a presence in China since Bill Gates dined with the Chinese premier back in 1992, and reportedly has more than 9,000 employees in China, more than 80 percent of whom are software engineers. President Xi Jinping even refers to Gates as “an old friend.” The problem? Much of Microsoft’s top talent has been poached by Chinese tech groups desperate to develop their own version of OpenAI’s ChatGPT while challenging U.S. dominance. In fact, top talent at some of the most destabilizing Chinese firms, from Alibaba to SenseTime to Megvii, are Microsoft grads. It’s no wonder that a tech consultant told the Financial Times that Microsoft’s contribution to AI research in China “has been phenomenal.”

  • They’ve helped create China’s tools of domestic terror, now for sale to like-minded authoritarians. Microsoft helped China’s military develop the financial recognition technology that is being used by the Chinese government today to terrorize ethnic minorities, including the Uyghur population. A research paper published in 2019 by the Microsoft Research Institute in Beijing in partnership with a university controlled by China’s premier military body described a new AI method that analyzed human faces to create detailed maps of the population, with clear applications for censorship, surveillance, and even espionage. It is precisely like the kind of technology that China has used to arbitrarily detain nearly two million Muslims in reeducation camps since 2017, while reportedly also exporting the technology to other authoritarian governments intent on quashing dissent while terrorizing dissenters. Microsoft’s AI development with China was put under the microscope in the U.S. Senate Committee hearing on Artificial Intelligence and Human Rights following a question asked by Sen. Marsha Blackburn about U.S. companies providing technology to help the CCP surveil citizens in China.

  • They’re helping Beijing collect personal data on U.S. citizens. Microsoft recently announced a new artificial intelligence and machine learning collaboration with ByteDance, the parent company of TikTok, which was founded by a Microsoft-trained engineer, even while concerns that TikTok is sharing personal data on millions of U.S. citizens with the Chinese government continue to skyrocket. Six months before the TikTok U.S. CEO was forced to testify before Congress about the company’s alarming data practices, Microsoft proudly launched its new collaboration with ByteDance to build large applications using open-source software, despite the fact that Microsoft is a U.S. defense contractor.

  • They’re enabling China to steal U.S. intellectual property while accessing sensitive information on U.S. networks. As a Forbes national security contributor argued last week, Microsoft readily admits that Chinese state-supported actors continue to hack into their products to steal American intellectual property while gaining access to U.S networks. Yet, it continues to sell more than 70 products across China through a network of 17,000 Chinese partners – all of whom have outsized access to Microsoft’s source code and other proprietary information. Best of all, when Microsoft determines that its systems have been hacked, according to Forbes, the Chinese government insists that it alone must be told first, before any other organizations are notified – enabling China’s state-sponsored hackers to launch attacks globally before security fixes are created.

  • They’re helping advance anti-U.S. Chinese military propaganda. Microsoft continued to push approval from Chinese regulators of its acquisition of Activision Blizzard, despite the Chinese government’s stated intention to use video games like World of Warcraft and Call of Duty as a tool to disparage so-called Western ideologies like “democracy” and “liberty” while advancing Chinese military propaganda. Just last fall, Activision Blizzard chose to end a 14-year contract with its local Chinese partner, NetEase Inc. (since, under Chinese law, U.S. companies must distribute products and share sensitive code with Chinese partners to do business on the mainland). While no specific reason was given, one reported key obstacle was over how Chinese players’ data is controlled. Yet, last month, data issues aside, China approved of Microsoft’s acquisition – surely with an eye toward how future Activision games could train the next generation of Chinese military leaders.

While there are clearly enough antitrust concerns for the FTC to block Microsoft’s acquisition of Activision Blizzard, the increasingly urgent AI-assisted national security threats to the U.S. posed by an aggressive Chinese Communist government should ensure that this deal never sees the light of day. There’s just too much at risk.