Microsoft intends to bolster its position in the artificial intelligence market against fierce competition by investing $1.5 billion in G42, an artificial intelligence startup situated in the United Arab Emirates.
TakeAway Points:
- Microsoft intends to bolster its position in artificial intelligence by investing $1.5 billion in G42, an artificial intelligence startup situated in the United Arab Emirates.
- Brad Smith, President of Microsoft, will become a member of the G42 board of directors. The two companies’ current collaboration is strengthened by the investment, in which Microsoft now owns a minority share.
- The purchase is unique because of the significant government engagement, which follows the American examination of G42 for purported Chinese connections.
Microsoft Invests $1.5 Billion in G42
Brad Smith, President of Microsoft, will become a member of the G42 board of directors. The investment expands an existing partnership between the two firms, with Microsoft now taking a minority stake.
G42 plans to utilise Microsoft Azure for running its AI apps and services, in addition to deploying Microsoft’s cloud solutions. G42 sells AI applications and manages data centres. The business has created a huge language model for Arabic called Jais, which it will make available through Azure.
Highlighting G42 China ties
The deal itself is highly unusual. The commercial partnership is “backed by assurances to the U.S. 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,” according to Microsoft.
Both the US and UAE governments seemed to have a significant hand in the transaction.
“Both companies will move forward with a commitment to comply with U.S. and international trade, security, responsible AI, and business integrity laws and regulations,” Microsoft said.
“The work on these topics is governed by a detailed Intergovernmental Assurance Agreement between G42 and Microsoft that was developed in close consultation with both the UAE and U.S. governments.”
In addition to leading G42, Sheikh Tahnoon bin Zayed Al Nahya serves as the UAE’s national security advisor.
The government’s intervention follows months of investigation into G42’s ties to China. The chairman of the U.S. Select Committee on the Chinese Communist Party, House Representative Mike Gallagher, R-Wis., requested in January that the Commerce Department “closely study” G42 to see whether it ought to be placed on a trade export blacklist.
Gallagher claims that G42 collaborates with China’s military and intelligence agencies and keeps ties with Chinese companies that are on the blacklist, like Huawei. G42 “categorically” refuted the claims in January.
“In the field of advanced technologies, we have pursued a commercial strategy since 2022 to fully align with our U.S. partners and not to engage with Chinese companies,” the company said at the time.
G42 itself has reportedly invested in Chinese firms, including TikTok owner ByteDance.
UAE Technology Upswing
The UAE, which has been attempting to establish itself as a major technological powerhouse in the Middle East, particularly in fields like artificial intelligence and cryptocurrencies, will benefit from the Microsoft-G42 partnership.
In what seemed to be a compliment to the nation’s laws governing the technology, OpenAI CEO Sam Altman stated in February that the United Arab Emirates might act as the world’s “regulatory sandbox” for testing artificial intelligence.
In order to encourage the creation of a professional AI workforce, Microsoft and G42 announced on Tuesday that they would establish a $1 billion fund for developers in the United Arab Emirates and the surrounding region.
