Microsoft, with an army of lobbyists, deep pockets for campaign contributions, and a large economic footprint in the state of a key senator, appears to have won at least a temporary victory in the debate over the 2026 National Defense Authorization Act.
Last week, the Senate passed its version of the 2026 NDAA following the House’s passage of its defense bill last month. With both pieces of legislation clearing their respective chambers, representatives from the two bodies now must meet and negotiate a compromise bill to reconcile any differences.
As this bicameral conference approaches, Microsoft has reportedly won an important concession.
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Sen. Maria Cantwell (D-WA) had previously used her position as ranking member of the Senate Commerce Committee to stop an amendment to the legislation that would have empowered the Treasury Department to block investments in China related to sensitive technologies and would require firms engaging in such behavior to notify the department. The senator reportedly did this at the urging of Microsoft.
While Microsoft is named in press reports, other U.S. tech firms such as Google and Amazon also have Chinese business footprints, which could be affected by the bill, throw around considerable funds to influence policy, and have strong ties to the state of Washington.
Cantwell ultimately relented and allowed the amendment to advance after she was granted assurances from other senators that Microsoft’s technical concerns regarding outbound investment would be addressed during the bicameral conference.
What Microsoft’s specific concerns were, however, went unreported. According to a congressional source, Cantwell’s hesitation stemmed from a specific technical definition in the bill, and her concerns were assuaged by the allowance of the Treasury Department, rather than legislators, to codify that definition. Records show that Microsoft directly employs over a dozen lobbyists tasked with influencing the Treasury Department, including various former legislative and administration officials.
These motions did not happen in a vacuum.
Microsoft, for instance, is one of the largest employers in Cantwell’s home state of Washington, boasting over 55,000 employees in the state as of June 2024, and is a significant source of economic activity for her constituents.
Microsoft executives have also cut large checks to Cantwell over the years, campaign finance records show. Among these are one-time CEO Steven Ballmer, Microsoft Azure CTO Mark Russinovich, Microsoft Gaming CEO Phil Spencer, Microsoft CTO Kevin Scott, and even Bill Gates himself. Microsoft employees were the senator’s second-largest source of donations in 2024, according to OpenSecrets.
Perhaps more potent than Microsoft’s campaign donations is the legion of lobbyists it employs to advocate on its behalf.
Lobbying records indicate that the tech giant has spent roughly $6.7 million on lobbying efforts this year. Notable Microsoft lobbyists include Cantwell’s former legislative director, former general counsel for the Senate Judiciary Committee, the Biden administration’s deputy assistant secretary of commerce for legislative affairs, as well as multiple other former high-ranking administration and legislative officials.
Microsoft lobbyist Fred Humphries, who records indicate is involved in Microsoft’s NDAA lobbying, has donated nearly $10,000 to Cantwell since 2017.
Experts who spoke with the Washington Examiner warned about ways that lobbyists may seek to alter the Chinese investment amendment and diminish its utility for national security.
“One thing that industry tends to do regarding national security legislation is they operate under this idea that only certain entities in China are of concern,” Foundation for American Innovation senior fellow Evan Swarztrauber said. “There’s no such thing as, ‘this entity is fine, but this one isn’t.’ Every company there is subject to the national security laws that not only require you to transfer source code, but also require Chinese nationals who work for American companies to potentially participate in cyber espionage … Unfortunately, sometimes in the past, industry has had success watering down export controls or other measures involving China by saying these only apply to specific entities that are named by the Commerce Department as problematic.”
Center for a New American Security senior fellow Emily Kilcrease, meanwhile, stressed the importance of maintaining both of the bill’s primary pillars.
“It will be important that the program is not just the notifications piece of things,” Kilcrease told the Washington Examiner. “Notifications are always kind of a watered down version of trying to do this program. It’s information gathering. It’s helpful. It’s helpful for them to have that sort of visibility. Unless you actually have a bright line that says, these activities cannot happen, they are unlawful, companies are still going to invest … they need to keep the scope of actual prohibited transactions in the legislation in order for this to be meaningful.”
When asked about what edits were under consideration for the amendment, a spokeswoman for Sen. John Cornyn (R-TX), the primary Republican sponsor of the amendment, referred the Washington Examiner to Cantwell’s office, which did not return a request for comment. Sen. Catherine Cortez-Masto (D-NV), the primary Democratic sponsor of the amendment, also did not respond to an inquiry.
“Hundreds of billions of everyday Americans’ retirement savings and pensions have been funneled offshore to subsidize the Chinese Communist Party’s industrial policy, build China’s technological dominance, and modernize the Chinese military,” Heritage Foundation senior China policy adviser Bryan Burack told the Washington Examiner, referencing the fact that many publicly traded corporations whose stock is held in retirement funds have considerable investments in China. “By doing so, Wall Street and Silicon Valley helped lay the groundwork for China’s economic warfare that is holding the U.S. economy hostage today. This self-defeating insanity must stop. The American people deserve both transparency, and firm prohibitions on this activity.”
Microsoft’s interest in the bill and willingness to dedicate significant financial resources to influencing American national security and commerce policy could be downstream of its considerable investments in China.
As it relates to new technology, for instance, Microsoft spent more than $1 billion on research and development in China between 2008 and 2018. This work was conducted primarily through Microsoft Research Asia, a research arm of the tech giant based in Beijing that is still very much active.
MRSA has faced criticism from national security hawks in recent years following reports that it has conducted research alongside academics linked to the Chinese military and trained thousands of individuals who have gone on to work for, or found, major Chinese tech ventures — including those dealing in artificial intelligence.
MRSA currently has multiple job postings live for AI-related roles.
Microsoft also recently made a $1.4 billion investment in G42, the leading AI firm in the United Arab Emirates. The stake has been complicated by tensions between the United States and China, as the firm, despite being Emirati, has a Chinese CEO who is deeply connected to the country’s government-friendly business community.
On top of its investments, Microsoft also provides cloud services to a number of Chinese firms, which could allow the Chinese government to leverage its national security laws to demand data from the tech giant. Microsoft President Brad Smith, however, has stated before Congress that, if such a law were enforced, his firm would not comply.
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“The first order of business for us is to make sure that we are not in any way strengthening China’s own capacity and when you have investing in Chinese companies in critical sectors, that is effectively funding our own destruction,” Hudson Institute senior fellow Michael Sobolik told the Washington Examiner, explaining why he believes outbound investment restrictions are important. “When Mike Gallagher was chairing the Select Committee, he did a lot of work on that theme of the United States funding its own destruction by propping up Chinese companies and critical technological sectors. We need to make sure that American money is supporting American companies for American technology and not Chinese technology that will support the People’s Liberation Army.”
Microsoft, Amazon, and Google did not respond to requests for comment.
