Microsoft to Invest $1.5 Billion in a UAE-Based AI Company

Microsoft has decided to invest $1.5 billion in an AI firm called G42 based in the United Arab Emirates. Although Microsoft previously had ties with this company, this is the first time it’s getting a minor stake in it.

It’s also the first time Microsoft is making a significant effort to expand its services to the Middle East.

The partnership comes at a crucial time considering there’s a power struggle between Washington and Beijing over who gets to have more technical control, especially in the Persian Gulf region.

Apparently, there’s also a second phase of this partnership that’s yet to be discussed and is expected to be more controversial because Microsoft might transfer some of its AI powers to G42.

Read more: Microsoft decides to invest $2.9 billion in Japan to develop AI and Cloud industry

Criticism: G42’s Ties with China

While on the surface this seems like a great deal. G42’s ties with China bring in a lot of criticism.

So, US officials are worried that G42 might share American technology and other confidential information with China. This concern was addressed by Xiao himself in January where he labeled these speculations as “misinformation”.

However, the problems are far from over. This year a congressional committee including House Rep. Mike Gallagher, R-Wi., chairman of the U.S. Select Committee on the Chinese Communist Party wrote a letter to the Commerce Department asking it to look into G42 and putting it under trade restrictions for its connections to China.

Certain allegations were also made that said G42 maintains links with blacklisted companies like Huawei and works with the Chinese military and intelligence.

Steps Taken to Minimize China’s Influence on This Partnership

Commerce Secretary, Gina Raimondo, has made it very clear that when it comes to advancing technology, no one can work with both the US and China at the same time. You have to pick a side.

Both G42 and Microsoft said that they will be committing to comply with US and international trade rules.

Why Is This Partnership Important?

This partnership is very important for the companies as well as the nations.

Microsoft

For Microsoft, it’s a way to tap into a new market. Fostering relationships with multiple international AI companies has been its key strategy in the last couple of years to position itself as a global AI leader. It’s for the same reason that it’s also collaborating with OpenAI (US-based) and Mistral (France-based).

G42

G42 will benefit as it will gain access to AI computing power in Microsoft’s data center in the Emirates. Since this is sensitive technology that cannot be sold in the country without an export license, it will give G42 an upper hand over its competitors.

UAE

Microsoft will give UAE the much-needed AI boost that it has been striving for. UAE has been trying to emerge as an AI leader in the Middle East, so Microsoft and G42 have decided to support this dream by setting up a $1 billion dollar fund for UAE developers to nurture the AI skills of workers in the region.

The US

The United States, on the other hand, will be able to fight against China’s growing dominance in the tech industry. Once the deal goes through and G42 severs all ties with China, it might serve as a model for other US AI companies to leverage their technical prowess and separate other countries from China.