Microsoft is spinning off its Chinese chatbot business into an independent company. Microsoft plans to maintain investment interest in the new company as work after it finishes spinning it out in the next few months, according to an announcement by Microsoft in China (which I saw via TechCrunch on July 13).

Xiaoice, translated as “Little Bing,” has been a big hit in China since it was launched in 2014. Xiaoice has similar counterparts available in India (Ruuh), Japan, and Indonesia (Rinna) and the US (Zo.ai), which was the successor to the ill-fated Tay.ai. But none of these have been anywhere near as successful, in terms of the number of users or conversations as Xiaoice.

In 2018, Microsoft officials said Xiaoice had 500 million-plus users and more than 230 skills. Microsoft pioneered full-duplex conversational capabilities — the ability to have human-like verbal conversations — with Xiaoice. Microsoft has provided early demonstrations of this type of full-duplex capability for its productivity aide, Cortana, but, so far, it’s not enabled in the commercially available Cortana service.

According to the Microsoft Technologies announcement, Microsoft’s reason for spinning off Xiaoice is “to accelerate the pace of local innovation in Xiaoice product lines and to improve the Xiaoice business environment.” Microsoft plans to use the Xiaoice and Rinna brands in China and Japan, respectively, for technology productions and “commercialization.”

Microsoft has positioned Xiaoice, Zo, and other “social” chatbots as designed more for social conversation and entertainment, as opposed to Cortana, which is an AI chatbot/service for productivity tasks.

Former Executive Vice President Harry Shum, the head of Microsoft AI and Research, who left Microsoft in February this year, was a big backer of Xiaoice.