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Microsoft’s High-Stakes A.I. Deal in Tech Cold War

As Beijing and Washington jockey to win tech dominance in the Gulf, Microsoft announced that it would spend 1.5 billion dollars on investments in G42. This Emirati business has connections to China.

A partnership mainly arranged by the presidency of Joe Biden, Microsoft announced on Tuesday that it would invest 1.5 billion dollars in G42, a leading artificial intelligence company in the United Arab Emirates, with the aim of boxing off China as Beijing and Washington compete over who is going to hold technological move in the Gulf as well as worldwide.

As part of the cooperation, Microsoft will grant G42 rights to market Microsoft services that leverage potent AI chips for generative AI model training and optimization. G42, which Washington has been monitoring due to its connections to China, will accept a security arrangement hammered out in extensive talks involving the government of the United States in exchange for using Microsoft’s cloud services. It includes a commitment to remove Chinese equipment from G42’s operations and imposes several safeguards on the AI products that G42 shares.

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“You are not able to be in the Chinese camp or our camp whenever dealing with new technologies,” stated Commerce Secretary Gina Raimondo, who made two trips to the United Arab Emirates to discuss security plans regarding this along with additional collaborations.

According to Microsoft President Brad Smith, the agreement is unique and reflects the unprecedented interest of the United States government over safeguarding their intellectual property underlying artificial intelligence technologies.

“It is only normal for the United States to be mindful that a reputable American corporation is safeguarding its most critical technology,” Mr. Smith, who plans on joining G42’s board, stated.

With this investment, the United States could counter China’s growing dominance in the Gulf. Should the actions be successful, G42 would reintegrate into the United States and reduce its connections with China. The agreement may serve as a template for how American companies use their technological superiority in artificial intelligence to entice nations away from Chinese technology while still gaining large financial rewards.

However, the subject is delicate because G42 has drawn criticism from US authorities. This year, G42’s connections to China—including collaborations with Chinese corporations and personnel from government-affiliated companies—were the subject of a written request from a committee of the Senate requesting that the Commerce Department investigate if limitations on trade should apply.

In a conversation, Ms. Raimondo, whose work served at the forefront of attempting to stop China from acquiring the most cutting-edge semiconductors and the tools necessary to make them, stated that the agreement guarantees the safe development, protection, and deployment of artificial intelligence, models of artificial intelligence, and GPUs—the processing companies necessary for creating applications utilizing artificial intelligence.

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Despite not having signed an independent document, the United States and the United Arab Emirates agree that this arrangement aligns with their beliefs, according to Ms. Raimondo.

Peng Xiao, the group president and CEO of G42, stated in a press release that we are furthering our goal of providing cutting-edge artificial intelligence solutions at scale with Microsoft’s strategic financing.

With thousands of dollars at risk and big investors, notably Saudi Arabia, anticipated spending trillions on innovation, the US and China are competing for technological dominance in the Gulf. Many regional leaders have their eyes set on artificial intelligence (AI) in the push for diversification away from oil, and they have been eager to play China and the United States off one other.

The United Arab Emirates has grown its military and commercial connections with China, despite being an essential partner of the United States in terms of information and diplomatic activity, as well as one of the biggest purchasers of American weapons. Its internal security system uses gear from Chinese supplier Huawei, and its communications network is partially based on Chinese technology. Americans have been increasingly concerned about this, frequently traveling to the Persian Gulf region to address security matters.

However, if not properly safeguarded, Americans also worry that China or scientists with ties to the Chinese government may eventually exploit the increasing availability of potent artificial intelligence technologies vital to national security. The United States cybersecurity assessment group harshly chastised Microsoft last month for a vulnerability that gave Chinese hackers access to confidential information belonging to high-ranking officials. Any significant leak, such as one from G42 offering Microsoft artificial intelligence solutions to Chinese-founded businesses in the area, would violate the Biden presidency’s directives to restrict China’s consumption of cutting-edge technology.

According to Gregory Allen, an expert at the Institute for International and Strategic Studies and previously serving United States military officials specializing in artificial intelligence, these are some of the country’s most cutting-edge technologies. Everywhere should be a very good reason for doing it strategically.

Microsoft may have access to significant Emirati money through a partnership with G42. The corporation is a vital component of the United Arab Emirates’ aspirations to establish itself as a major participant in artificial intelligence. Sheikh Tahnoon bin Zayed, the younger sibling of the nation’s leader and national security adviser, leads the board.

Though its name is a playful parody of “The Hitchhiker’s Guide to the Galaxy,” which states that 42 is the answer to life’s fundamental question, G42 is firmly ingrained in the security system of the United Arab Emirates. It notably worked on creating Jais, an Arabic chatbot, and specialists in artificial intelligence.

G42 also focuses on security and the field of biotechnology. Several of its leaders, particularly Mr. Xiao, had ties to DarkMatter, an Emirati malware and cyber-intelligence organization that hires ex-spies.

The House Select Committee on the Chinese Communist Party, which is cross-party, stated in a letter sent earlier this year that Mr. Xiao is associated with an extensive network of businesses that “significantly back” the scientific advancements of the Chinese military.

The talks that resulted in Tuesday’s agreement began in the White House the previous year when senior national security advisors questioned tech leaders about how to promote agreements that would strengthen United States ties to international companies, particularly ones China also seems engaged in.

 G42 has agreed to stop employing Huawei telecommunications equipment, which the United States believes could give the Chinese intelligence services an access point. The agreement also forbids G42 from utilizing the technology for spying and requires it to obtain consent before sharing its equipment with other nations or armed forces. Microsoft will also be able to inspect G42’s technology usage.

G42 would have access to Microsoft’s server room in the United Arab Emirates, which houses confidential technology that isn’t allowed to be sold there without a permit for export. Access to the computational capacity would give G42 a regional competitive advantage. Unnegotiated, a potentially even more contentious subsequent stage of the agreement would see part of Microsoft’s artificial intelligence technologies transferred to G42. 

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In several confidential evaluations, the New York Times recently revealed that United States intelligence authorities expressed worries regarding G42’s ties to China. Officials from the presidency of Joe Biden have also urged their Emirati equivalents to sever the company’s connections with China. Although some officials think the US pressure effort has succeeded, they are nevertheless anxious regarding G42’s less obvious ties to China.

A former employee of G42 was Yitu, a Chinese artificial intelligence (machine learning.) surveillance startup with a strong connection to the nation’s security agencies that conducts face recognition-powered monitoring throughout China. The business also has connections to The Biotechnology and Genetic, a massive Chinese genomics enterprise, whose companies the Biden administration blocked last year. In 2019, Mr. Xiao oversaw a company that launched and ran the social media app TikTok, which American intelligence agencies claimed was an Emirati surveillance tool for gathering user data.

According to the United States authorities, G42 has consented to sever some of its relationships with China in the past few months, including selling off some of its ownership in ByteDance. This company owns TikTok and is removing Huawei hardware from its business activities.




Editorial Staff
Editorial Staff
Editorial Staff at AI Surge is a dedicated team of experts led by Paul Robins, boasting a combined experience of over 7 years in Computer Science, AI, emerging technologies, and online publishing. Our commitment is to bring you authoritative insights into the forefront of artificial intelligence.


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