Microsoft announced Tuesday that it will make a $1.5 billion investment in G42, an artificial intelligence giant in the United Arab Emirates, in a deal largely orchestrated by the Biden administration to fend off China as Washington and Beijing they are fighting over who will wield technological influence in the Gulf Region and beyond.
As part of the partnership, Microsoft will give G42 a license to sell Microsoft services that use powerful AI chips, which are used to train and improve AI production models. In return, the G42, which has come under scrutiny from Washington over its ties to China, will use Microsoft’s cloud services and join a security agreement negotiated in detailed talks with the US government. It places a number of protections on the artificial intelligence products shared with the G42 and includes an agreement to remove Chinese equipment from the G42’s operations, among other steps.
“When it comes to emerging technology, you can’t be both in China’s camp and in our camp,” said Gina Raimondo, the commerce minister, who has traveled twice to the United Arab Emirates to talk about security arrangements for it and other collaborations.
The deal is highly unusual, Microsoft chairman Brad Smith said in an interview, reflecting the US government’s extraordinary concern about protecting the intellectual property behind artificial intelligence programs.
“The US is naturally concerned that the most important technology is being held by a trusted American company,” said Mr Smith, who will take a seat on the G42 board.
The investment could help the United States push back against China’s growing influence in the Gulf region. If the moves succeed, the G42 will be admitted to the US and restore ties with China. The deal could also become a model for how U.S. companies use their technological leadership in artificial intelligence to lure countries away from Chinese technology while reaping huge financial rewards.
But the issue is sensitive, as US officials have raised questions about the G42. This year, a congressional committee wrote a letter calling on the Commerce Department to consider whether the G42 should be subject to trade restrictions over its ties to China, which include partnerships with Chinese companies and employees from government-linked companies .
In an interview, Ms. Raimondo, who has been at the center of an effort to prevent China from acquiring the most advanced semiconductors and the equipment to make them, said the agreement “does not allow the transfer of artificial intelligence or artificial intelligence models intelligence. or GPUs” — the processors needed to develop artificial intelligence applications — and “ensures that these technologies can be developed, protected and deployed securely.”
While the United Arab Emirates and the United States did not sign a separate agreement, Ms. Raimondo said: “We have been briefed extensively and feel comfortable that this agreement is consistent with our values.”
In a statement, Peng Xiao, G42’s group chief executive, said that “through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge AI technologies at scale.”
The United States and China are vying for technological influence in the Gulf, where hundreds of billions of dollars are up for grabs and major investors, including Saudi Arabia, are expected to spend billions on technology. In the rush to diversify away from oil, many leaders in the region have set their sights on artificial intelligence—and were happy to play the United States and China against each other.
Although the UAE is an important diplomatic and intelligence partner of the US and one of the largest purchasers of US arms, it has increasingly expanded its military and economic ties with China. Part of its domestic surveillance system is based on Chinese technology, and its telecommunications run on hardware from Huawei, a Chinese supplier. That fueled the concerns of US officials, who frequently visit the Gulf nation to discuss security issues.
But U.S. officials also worry that the spread of powerful artificial intelligence technology critical to national security could eventually be used by China or by engineers linked to the Chinese government if it is not adequately guarded. Last month, a U.S The Cybersecurity Review Board has slammed Microsoft over a hack in which Chinese hackers gained access to data from top officials. Any significant spillover — for example, of Microsoft selling artificial intelligence solutions at the G42 to companies set up in the region from China — would run counter to the Biden administration’s policies that have sought to limit China’s access to cutting-edge technology.
“This is some of the most advanced technology that the US has,” said Gregory Allen, a researcher at the Center for Strategic and International Studies and a former US defense official who worked on artificial intelligence. “
For Microsoft, a deal with the G42 offers potential access to the vast wealth of the Emirates. The company, whose chairman is Sheikh Tahnoon bin Zayed, the Emirati national security adviser and the younger brother of the country’s ruler, is a key part of the UAE’s efforts to become a major player in artificial intelligence.
Despite a name whimsically derived from ‘The Hitchhiker’s Guide to the Galaxy’, in which the answer to ‘life’s ultimate question’ is 42, G42 is deeply embedded in the Emirates’ security situation. He specializes in artificial intelligence and recently worked on building an Arabic chatbot, called Jais.
G42 also focuses on biotechnology and surveillance. Several of its executives, including Mr. Xiao, were associated with a company called DarkMatter, an Emirati cyber-espionage and hacking firm that employs former spies.
In its letter this year, the bipartisan House Select Committee on the Chinese Communist Party said Mr. Xiao was connected to an extensive network of companies that “substantially support” the technological advancement of the Chinese military.
The origins of Tuesday’s deal go back to White House meetings last year, when top national security aides raised the question with tech executives about how to encourage business arrangements that would deepen U.S. ties with companies around the world, especially those for which China is also interested in.
Under the agreement, the G42 will stop using Huawei telecommunications equipment, which the United States fears could be a backdoor for Chinese intelligence services. The agreement further commits the G42 to seek permission before sharing its technologies with other governments or militaries and prohibits it from using the technology for surveillance. Microsoft will also have the power to control G42’s use of its technology.
The G42 would use AI computing power at Microsoft’s data center in the UAE, sensitive technology that cannot be sold in the country without an export license. Access to computing power would likely give the G42 a competitive edge in the region. A second phase of the deal, which could prove even more controversial and has yet to be negotiated, could bring some of Microsoft’s AI technology to the G42.
US intelligence officials have raised concerns about the G42’s relationship with China in a series of classified assessments, the New York Times previously reported. Biden administration officials also pressured their Emirati counterparts to cut the company’s ties to China. Some officials believe the US pressure campaign has yielded some results, but remain concerned about less visible ties between the G42 and China.
A G42 executive previously worked for Chinese AI surveillance firm Yitu, which has extensive ties to China’s security services and has facial-recognition-enabled surveillance across the country. The company also had ties to a Chinese genetics giant, BGI, whose subsidiaries were blacklisted by the Biden administration last year. Mr Xiao also headed a company involved in 2019 in launching and operating a social media app, ToTok, which US intelligence said was an Emirati spying tool used to collect user data.
In recent months, G42 has agreed to shed some of its ties to China, including divesting a stake in TikTok owner ByteDance and withdrawing Huawei technology from its operations, according to US officials.
Edward Wong contributed to the report.
