In a recent development, OpenAI backed by Microsoft Corp. (NASDAQ:MSFT), has reportedly announced its plans to restrict access to its tools and software in China starting in July.

What Happened: OpenAI, the creator of ChatGPT, has communicated its intentions to developers in various regions via a memo according to screenshots posted on social media, Bloomberg reported on Tuesday. This move is seen as an attempt to exclude users from countries where its services are not available. In response, Chinese tech giants, including Alibaba Group Holding Ltd. (NYSE:BABA) and Tencent Holdings Ltd. (OTC:TCEHY)-backed Zhipu AI, are urging developers to transition to their products.

While the exact reason behind OpenAI’s decision is not known, it coincides with mounting pressure from the U.S. government to curb China’s access to advanced AI technology. Despite the official unavailability of OpenAI in China, developers have been using its tools via virtual private networks and other means.

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This development comes at a time when Chinese companies like Baidu Inc. (NASDAQ:BIDU) and startups like Zhipu are striving to create AI models that can compete with U.S. industry leaders. Simultaneously, the U.S. is trying to restrict China’s access to crucial technologies to limit Beijing’s ability to develop sensitive technologies that could threaten U.S. national security.

OpenAI has yet to respond to the queries sent by Benzinga.

Why It Matters: The move by OpenAI follows a trend of U.S. tech giants, including Google, enhancing their security measures amid growing concerns over Chinese espionage. OpenAI previously also reported the exploitation of its AI models by networks linked to China, Russia, Iran, and Israel to disseminate disinformation.

China has been developing its own AI models, such as a large language model based on President Xi Jinping’s political philosophy.

Furthermore, tech analyst Gene Munster suggested that Apple Inc. could potentially partner with Chinese tech giants Alibaba and Baidu for its AI features in China.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari