Microsoft pours $1.5 bn into Emirati AI amid US-China power struggle 


The investment cements Abu Dhabi and the wider United Arab Emirates (UAE) position as a global AI hub 

Microsoft and UAE-based AI company G42 have announced a strategic partnership to accelerate AI innovation in the UAE and neighbouring regions.  

The partnership involves a $1.5 billion investment in G42 from Microsoft, giving them an unspecified minority stake in the company.  

Brad Smith, Microsoft’s Vice Chair and President, will also join G42’s board of directors.  

The focus of the partnership is to innovate and deliver advanced AI solutions supported by Microsoft Azure across various industries, including finance, healthcare, energy, government, and education. 

Specifically, Microsoft will give G42 permission to sell Microsoft services that use AI chips and in return, G42 will use Microsoft’s cloud platform to run its AI applications. 

“The commercial partnership is backed by assurances to the US and UAE governments through a first-of-its-kind binding agreement to apply world-class best practices to ensure the secure, trusted, and responsible development and deployment of AI,” read the press release. 

The partnership also includes initiatives to train AI talent through a $1 billion fund for developers, promoting skills development and fostering innovation in emerging markets. 

“Through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge AI technologies at scale. This partnership significantly enhances our international market presence, combining G42’s unique AI capabilities with Microsoft’s robust global infrastructure,” said G42 CEO Peng Xiao in a press release. 

The ongoing US-China power struggle for the UAE 

‘This investment takes place against the backdrop of both the US and China attempting to grow their influence in the UAE’s flourishing technology industry’. The deal has been finalised in close collaboration with both the US and UAE governments to ensure that G42 is fully compliant with US regulations.  

President Biden’s government has been notably concerned over increasing closeness between The Gulf Cooperation Council and China, a relationship which would potentially limit companies in the Middle East from being trusted partners in the US.  

Back in January, Representative Mike Gallagher (R-WI), Chairman of the House Select Committee on the Chinese Communist Party, expressed concerns that G42 had links to Chinese firms blacklisted by the US government, including Huawei, which G42 denied.  

Then, in February, G42 announced its intention to divest in its Chinese businesses interests, a move G42 explained as an effort to reassure US partners, who include US private equity firm Silver Lake, of data sovereignty.  

The size of the divestments was not disclosed, but stakes included an estimated $100m in ByteDance, owner of TikTok.  

Speaking to the Financial Times, Xiao said “For better or for worse, as a commercial company, we are in a position where we have to make a choice. We cannot work with both sides.” 

The New York Times report adds that the deal today puts protections on the AI materials Microsoft may share with G42. These include an agreement for G42 to remove Chinese equipment from their operations, including Huawei equipment, which the US government fears “could provide a backdoor for Chinese intelligence agencies.” 

“In order for us to preserve our relationship – which we cherish – with our US partners, we simply cannot do much more with Chinese partners,.said Xiao. 

The US position on the matter remains painfully clear, as laid out by numerous government representatives.  

“When it comes to emerging technology, you cannot be both in China’s camp and our camp,” said Gina Raimondo, the Commerce Secretary, according to a report from the New York Times.  

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