Topline
Microsoft on Tuesday announced it will invest $1.5 billion in leading United Arab Emirates artificial intelligence firm G42, the tech giant’s latest high stakes investment in the sector and a sign of growing ties between Washington and Abu Dhabi as the U.S. fights to stay ahead of China in the race to control AI.
Microsoft inked a deal with Emirati AI firm G42.
Key Facts
G42 is a technology holding company and a giant in artificial intelligence, forming a crucial part of the UAE’s plans to become a world leader in the field with a variety of companies in areas including biotechnology, surveillance, healthcare and data centers.
The firm has strong connections in the region and is chaired by one of the most powerful members of Abu Dhabi's royal family and UAE national security adviser Sheikh Tahnoon bin Zayed Al Nahyan, as well as backed by Emirati sovereign wealth fund Mubadala.
Since its founding in 2018, G42 has has partnerships with major firms such as OpenAI, Dell, IBM, Microsoft, Nvidia and Oracle, Cerebras, which is building G42 a super computer, pharma titan AstraZeneca, genetics giant Illumina and Mercedes.
In recent months, G42’s ties to China have come under close scrutiny in the U.S. amid growing security concerns and fears the connections could compromise American technology.
The Emirati company has since severed its links with Beijing and the New York Times reports the latest deal with Microsoft places a series of protections on the AI products shared with G42 and has an agreement to remove Chinese equipment from its operations, including Huawei telecoms equipment.
Microsoft vice chair and president Brad Smith, who will gain a seat on G42’s board as part of the agreement, told journalists the deal had been made in “close coordination with the governments of both the UAE and the United States” and that Washington had offered Microsoft “strong encouragement… to move forward in this process.”
Crucial Quote
When asked whether the deal with Microsoft was a reward for G42 cutting ties with China, CEO Peng Xiao told journalists the deal was more about what the company could do rather than what it wouldn’t. “I would focus on our decision to form this partnership with Microsoft to really develop our capabilities on a global scale. Less focus on what we choose not to do.”
News Peg
The deal expands an existing partnership between the two firms and gives Microsoft a minority stake in the company. In return, G42 will run its AI services and applications on Microsoft’s cloud computing platform, Azure, which is sensitive and regulated technology, and collaborate with the U.S. firm to bolster the safety and security of its infrastructure. According to Bloomberg, G42 made a secret pact with the U.S. to divest from China before making the deal with Microsoft. According to the Times, its deal with the tech giant will include implementing measures to protect Microsoft’s AI technology, particularly regarding Chinese gear, and give Microsoft the power to audit how G42 uses its technology. Both companies also said the partnership will support the development of a skilled AI workforce for the UAE and broader region, including a $1 billion investment in a development fund for developers, and see them collaborate to build AI and digital infrastructure across the Middle East, Central Asia and Africa. Sheikh Tahnoon said the “investment in G42 marks a pivotal moment in our company’s journey of growth and innovation” and signifies “a strategic alignment of vision and execution.” It is a “testament to the shared values and aspirations for progress, fostering greater cooperation and synergy globally.”
Key Background
Microsoft’s deal with G42 is the company’s latest big swing in the AI space as companies like Google and OpenAI compete for talent and access to key technologies. For Microsoft, this includes training workers for an AI-enabled future, a $10 billion deal with ChatGPT maker OpenAI and a partnership with French AI startup Mistral. The U.S. giant’s pivot to AI also includes a keyboard design change, the first major alteration to the hardware in decades. The new design features a dedicated button to summon its AI assistant, Copilot.
What To Watch For
The Times reports a second phase of the deal is possible but not yet negotiated. It could be controversial, the Times said, as it may include the transfer of some of Microsoft’s AI technology.
Further Reading
