Microsoft said on Tuesday it would 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 exclude China as Washington and Beijing fight over who will exert technological influence in the Persian Gulf region and beyond.
Under the partnership, Microsoft will give G42 permission to sell Microsoft services that use powerful ai chips, which are used to train and tune generative ai models. In exchange, the G42, which has been under scrutiny by Washington for its ties to China, will use Microsoft's cloud services and agree to a security agreement negotiated in detailed talks with the US government. It places a series of protections on ai products shared with the G42 and includes an agreement to remove Chinese equipment from G42 operations, among other measures.
“When it comes to emerging technology, you can't be in China's camp and in ours at the same time,” said Gina Raimondo, the Commerce Secretary, who traveled twice to the Emirates to discuss security arrangements for this and other associations.
The deal is highly unusual, Brad Smith, Microsoft's president, said in an interview, reflecting the US government's extraordinary concern for protecting the intellectual property behind ai programs.
“It is natural that the United States would be concerned that the most important technology is guarded by a trusted American company,” said Mr. Smith, who will take a seat on the G42 board of directors.
The investment could help the United States confront China's growing influence in the Gulf region. If the measures are successful, the G42 will join the American fold and reduce its ties with China. The deal could also become a model for how American companies leverage their technological leadership in artificial intelligence to steer countries away from Chinese technology, while reaping huge financial benefits.
But the issue is delicate, as US officials have raised questions about the G42. This year, a congressional committee wrote a letter urging the Commerce Department to investigate whether the G42 should be subject to trade restrictions over its ties to China, which include partnerships with Chinese companies and employees drawn from government-connected companies.
In an interview, Raimondo, who has been at the center of an effort to prevent China from obtaining the most advanced semiconductors and the equipment to make them, said the deal “does not authorize the transfer of artificial intelligence or ai models, or GPUs.” (the processors needed to develop ai applications) and “ensures that those technologies can be developed, protected and deployed securely.”
While the Emirates and the United States did not sign a separate agreement, Ms. Raimondo said: “We have been fully informed and feel comfortable that this agreement is consistent with our values.”
In a statement, Peng Xiao, CEO of G42 group, 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 have been competing to exert technological influence in the Persian Gulf, where hundreds of billions of dollars are at stake and major investors, including Saudi Arabia, are expected to spend billions on the technology. In the rush to diversify away from oil, many leaders in the region have set their sights on ai and have been happy to take on the United States and China.
Although the United Arab Emirates is a major diplomatic and intelligence partner of the United States and one of the largest buyers of American weapons, it has increasingly expanded its military and economic ties with China. Part of its national surveillance system is based on Chinese technology and its telecommunications run on hardware from Huawei, a Chinese supplier. This has fueled the concerns of US officials, who often visit the Persian Gulf nation to discuss security issues.
But U.S. officials are also concerned that the spread of powerful artificial intelligence technology critical to national security could eventually be used by China or engineers linked to the Chinese government if they are not sufficiently protected. Last month, a U.S. The cybersecurity review board sharply criticized Microsoft for a hack in which Chinese attackers gained access to data of senior officials. Any major leak (for example, the G42's sale of Microsoft's ai solutions to Chinese-created companies in the region) would run counter to Biden administration policies that have sought to limit China's access to the technology. on end.
“This is one of the most advanced technologies that the United States has,” said Gregory Allen, a researcher at the Center for Strategic and International Studies and a former U.S. defense official who worked on ai. “There should be a very strategic justification for offshoring anywhere.” .”
For Microsoft, a deal with the G42 offers potential access to the Emirates' enormous wealth. The company, whose president is Sheikh Tahnoon bin Zayed, the Emirates' national security adviser and younger brother of the country's ruler, is a key part of the Emirates' efforts to become a major ai player.
Despite a name drawn whimsically from “The Hitchhiker's Guide to the Galaxy,” in which the answer to “life's fundamental question” is 42, the G42 is deeply embedded in the Emirati security state. He specializes in artificial intelligence and recently worked to build an Arabic chatbot, called Jais.
The G42 also focuses on biotechnology and surveillance. Several of its executives, including Xiao, were associated with a company called DarkMatter, an Emirati cyber intelligence and hacking company that employs former spies.
In its letter this year, the bipartisan House Select Committee on the Chinese Communist Party said Xiao was connected to an expansive network of companies that “materially support” the technological advancement of the Chinese military.
The origins of Tuesday's deal date back to White House meetings last year, when top national security advisers raised the question with technology executives about how to foster trade deals that would deepen U.S. ties with companies around the world. world, especially those in which China is also interested.
Under the agreement, the G42 will stop using telecommunications equipment from Huawei, which the United States fears could provide a backdoor to Chinese intelligence agencies. The agreement also commits the G42 to request 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 audit G42's use of its technology.
G42 would use ai computing power at Microsoft's data center in the Emirates, a sensitive technology that cannot be sold in the country without an export license. Access to computing power would likely give the G42 a competitive advantage in the region. A second phase of the deal, which could prove even more controversial and has not yet been negotiated, could transfer 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 have also pressured their Emirati counterparts to cut the company's ties with China. Some officials believe the US pressure campaign has yielded some results, but remain concerned about less overt ties between the G42 and China.
One G42 executive previously worked at Chinese ai surveillance company Yitu, which has extensive ties to China's security services and conducts facial recognition-based monitoring across the country. The company has also had ties to a Chinese genetics giant, BGI, whose subsidiaries were blacklisted by the Biden administration last year. Xiao also led a company that was involved in 2019 in starting and operating a social media app, ToTok, which U.S. intelligence agencies said was an Emirati spy tool used to collect user data.
In recent months, G42 agreed to backtrack on some of its ties to China, including selling a stake it acquired in TikTok owner ByteDance and withdrawing Huawei technology from its operations, according to U.S. officials.
Eduardo Wong contributed reports.
