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In response, China has imposed retaliatory tariffs and implemented export restrictions on certain rare-earth minerals and semiconductor-related products, including microchips.

The BIS has temporarily suspended its 50% Affiliates Rule, until November 10, 2026.

The BIS Inquiries seek documents relating to our business, customers, products, transactions and export compliance practices.

•government regulations, including export controls, tariffs, or other trade restrictions;

In November 2025, the BIS suspended the Affiliates Rule for one year until November 2026.

For example, China's changes to its export control requirements on certain materials, including rare earth minerals have caused, and could continue to cause, impact on our ability to receive raw materials and components, costs and production.

In addition, the Chinese government has retaliated, and may continue to retaliate, to recent changes in U.S. tariffs and export controls in ways that could indirectly impact our business.

The voluntary self-disclosure to BIS was completed with no penalties in June 2020.

We are subject to export control, import and sanctions laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.

Our international sales and operations and global customer base subject us to additional risks, including trade restrictions, export controls and sanctions, that can adversely affect our operating results.

Additionally, in 2026 China's State Council promulgated the Regulations on the Security of Industrial and Supply Chains (Decree No. 834) and the Regulations on Countering Foreign Improper Extraterritorial Jurisdiction (Decree No. 835), which expand Chinese authorities' powers to investigate, restrict, and impose countermeasures on foreign companies that implement or assist foreign export controls, sanctions, or other

Measures taken to date by the company to mitigate these impacts could be made less effective should trade sanctions, export controls, or tariffs change.

The complexity and rapidly changing nature of export control regulations make compliance challenging and expensive.

The manufacturing operations of some suppliers are geographically concentrated in Asia, making our supply chain vulnerable to regional disruptions and international regulations, including tariffs, sanctions, and export controls.

Our supply chain could be adversely affected by geopolitical tensions, export controls, trade restrictions, tariffs or other changes in U.S. or foreign government policies affecting cross-border commerce.

We cannot predict whether, and to what extent, there may be changes to international trade agreements, such as those with China, or whether, or to what extent, quotas, duties, additional tariffs, export controls or other restrictions will be changed or imposed by the United States or by other countries.

Governments have adopted or proposed measures, including export controls on certain minerals, materials and equipment, that could adversely affect equipment and material availability, cost or movement.

For example, the Company’s artificial intelligence efforts may give rise to risks related to: competition and strategy; recouping costs and returns on investments; product liability; intellectual property infringement; data privacy; cybersecurity; sanctions and export controls; exposing users to harmful, inaccurate or other negative content or experiences; bias and discrimination; and online safety and protection of

With regard to China, the regulatory requirements on AI and ML Technologies, export controls and other relevant regulations are still evolving and have ongoing complexity and uncertainty.

Additionally, we are subject to complex regulatory requirements and executive orders, including those related to procurement; export controls; employment; security; and other evolving government-specific contractual requirements.

For example, our distributors could be adversely impacted by additional tariffs or export controls, which could limit our ability to conduct business with such distributors, increase our costs and adversely affect our reputation and operating results.

On February 11, 2026, we entered into a settlement agreement with the U.S. Commerce Department Bureau of Industry and Security (BIS) to resolve its inquiry relating to certain China customer shipments and export controls compliance and agreed to pay BIS $253 million, as well as conduct certain internal audits and maintain export compliance training and reporting mechanisms.

In addition, if our suppliers or customers fail or choose not to comply with these legal requirements or governmental actions, become subject to export restrictions or are designated a “supply chain risk,” we may be required to suspend purchasing from such suppliers or selling to such customers, which could damage our reputation and have a material adverse impact on our results of operations.

Overall, the U.S.-China trade relationship is challenged due to tariffs, sanctions, and export restrictions, as well as other economic and national security concerns.

•Import/export restrictions, environmental regulations (including climate change laws), and adverse tax consequences (such as withholding taxes)

To the extent governments in various regions implement or intensify restrictions or barriers to trade, such as tariff or non-tariff barriers, export controls, currency manipulation, or policies that otherwise favor domestic companies, there can be a significant negative impact on manufacturers based in other markets.

Continued or escalating tensions may also lead to the U.S., China or other countries taking other actions, which could include the implementation of sanctions, tariffs, export controls or foreign exchange measures, the large-scale sale of U.S. Treasury securities or restrictions on cross-border trade, investment or transfer of information or technology.

Government actions relating to rare earth minerals that are used in certain of our products, including U.S. Government sourcing prohibitions on the import of such minerals and the imposition of export controls on such minerals by China, have raised concerns about supply availability.

BIS transmitted its report to the President on December 22, 2025, concluding that imports of these products threaten U.S. national security given that the U.S. currently fully manufactures only approximately 10 percent of the chips it requires.

The potential replacement of the rescinded AI Diffusion Rule, expanded export license conditions, and other potential AI-related rulemakings could adversely affect Microsoft’s business, strategy, and operations.

The rule effectively imposes export control-like restrictions on the transfer, sale, or sharing of sensitive data-including genomic, geolocation, biometric, health, financial, and other personal data-to or with entities in countries of concern, as well as entities and persons associated with those countries.

For example, the French Competition Authority is questioning whether gaming GPUs and data center GPUs are separate product categories, an inquiry that may impact the export controls applicable to gaming products sold in France and Europe.

To the extent our technology is deemed a matter of national security, or our gate-model technology advances to a level identified under export control laws, our business could be subject to increased restrictions or regulations, our customer and supplier base may be restricted, our TAM may be reduced and our business, operating results and financial condition could be harmed.

For example, in May 2024, the U.S. Department of Commerce revoked the export license under which we previously sold 4G and certain other integrated circuit products to Huawei, which is one of the largest smartphone OEMs in China.

These risks include, among other things: unexpected costs and errors in the localization of our platform and solutions; potential burden associated with complying with foreign laws and regulations; heightened regulatory requirements and costs associated therewith (including import/export control laws, tariffs, and cybersecurity and data privacy laws); difficulties associated with enforcing intellectual property right

Selling to government and regulated customers involves significant costs and operational efforts that arise from special laws, regulations, certification or clearance requirements, procurement processes, contract terms, and customer requirements, including potential supply chain restrictions (such as “supply chain risk” designations for our suppliers or partners and export control directives limiting our access to th

Our products and services are subject to export controls and economic sanctions laws and regulations of the United States and potentially other jurisdictions in which we have operations.

controls (including the Chinese export controls on rare earth elements described above),