Microsoft injects $1.5 billion into UAE's G42
Reported 'behind-the-scenes deals' to ensure G42 removed some Chinese tech
Microsoft has announced a $1.5 billion investment in G42, a leading AI company based in the United Arab Emirates (UAE).
The partnership aims to advance AI solutions using Microsoft's Azure platform across the Middle East, Central Asia, and Africa.
The agreement, confirmed by Microsoft, is accompanied by commitments to both the US and UAE governments. The company pledges "secure, trusted, and responsible development and deployment of AI" in line with best practices.
As part of the deal, Microsoft President Brad Smith will join G42's board.
"With the breadth of the Microsoft Cloud and its differentiated AI capabilities, the deal significantly advances G42's strategy of delivering generative AI and next-generation infrastructure and services for a range of customers across financial services, healthcare, energy, government and education," Microsoft said.
For Microsoft, the deal opens doors to lucrative business opportunities in the UAE. G42, backed by a member of Abu Dhabi's royal family, Sheikh Tahnoon bin Zayed Al Nahyan, aspires to be a Middle Eastern AI leader.
The new partnership allows Microsoft to enter this growing market and potentially gain a competitive edge through its technology and expertise.
However, this massive investment isn't without its challenges.
In recent years, G42 has attracted scrutiny from US lawmakers concerned about the company's ties to blacklisted Chinese firms like Huawei.
Bloomberg reported that there were "behind-the-scenes deals" to ensure G42 removed some Chinese technology from its systems, potentially in favour of US alternatives.
US officials, led by the US Commerce Department's Bureau of Industry and Security (BIS) and backed by the National Security Council, approached the UAE last summer, essentially forcing G42 to pick a side.
The negotiations involved high-level figures including G42 CEO Peng Xiao, Sheikh Tahnoon, UAE ambassador Yousef Al Otaiba, and G42's general counsel.
In February, Peng Xiao confirmed a shift away from China, but details remained shrouded in secrecy.
The deal between Microsoft and G42 includes several security measures negotiated with the US.
G42 will be barred from using Huawei equipment. Additionally, G42 will require US approval before sharing its technology with other governments or militaries, and its use of the technology will be subject to Microsoft audits. G42 will reportedly get continued access to crucial US technology for AI applications, including Nvidia chips.
In a statement to Bloomberg, a G42 spokesperson acknowledged the impact of geopolitics, stating their desire to collaborate with "the most sophisticated AI technology companies in the world."
AI race heats up
Microsoft's announcement of $1.5 billion investment in G42 follows a recent statement by DeepMind CEO Demis Hassabis, who said Google intends to invest over $100 billion in AI development.
Hassabis' remarks came in response to rumours of a rival project, "Stargate," an AI supercomputer being built by Microsoft and OpenAI, with a potential price tag of $100 billion, according to The Information.
In response, Hassabis declared that Google intends to exceed this investment over time, signalling a fierce competition in the AI development arena.