Key Takeaways
Microsoft is investing in G42, the top artificial intelligence (AI) company in the United Arab Emirates. This strategic move comes after G42 agreed to cut ties with Chinese firms to favor US technology.
The investment fortifies the bonds between the US and UAE in the quest for AI supremacy while also providing Microsoft with a strategic entry point into the Middle Eastern market.
The infusion of funds from Microsoft signifies a strategic alignment between a key Middle Eastern entity and the US, as Washington endeavors to restrict Chinese access to AI innovations. As part of the pact, Brad Smith, President of Microsoft, will join G42’s board, and G42 will leverage Microsoft‘s Azure cloud platform for its AI endeavors.
G42, renowned for spearheading AI advancements in the UAE, had faced scrutiny over alleged affiliations with blacklisted Chinese firms and their government.
Expanding upon an existing collaboration, this investment grants the US tech behemoth a minority stake in G42. The latter did not disclose financial specifics, though the partnership also involves the establishment of a $1 billion fund for developers.
In a subsequent phase, Microsoft intends to deploy some of its applications within G42’s data centers. It will utilize the association to engage with customers in Africa and Central Asia.
Established in 2018 and headquartered in Abu Dhabi, UAE, G42 undertakes advanced AI research and development endeavors focused on big data, AI, and machine learning. It operates through its subsidiary, the Inception Institute of Artificial Intelligence (IIAI).
The company is overseen by UAE’s National Security Advisor, Tahnoun bin Zayed Al Nahyan, who is also the principal shareholder. Peng Xiao, formerly at the helm of Emirati cybersecurity firm DarkMatter Group, is leading the helm as Group CEO.
In 2020, the state-owned Mubadala Investment Company acquired a stake in G42. This facilitated the transfer of ownership of two IT entities, Injazat and Khazna, to G42. Subsequently, American private equity firm Silver Lake injected $800 million for a minority interest.
Operating across diverse sectors from cloud computing to autonomous vehicles, the Abu Dhabi-based entity is a pivotal component of the UAE National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan’s vast $1.5 trillion enterprise.
G42’s collaborative ventures encompass a partnership with AI developer OpenAI, as it expands its presence within the UAE and beyond. Discussions between OpenAI, primarily backed by Microsoft, and G42 have surfaced regarding potential funding for a new chip venture. However, the current status of these negotiations remains undisclosed.
While G42 isn’t seeking further investments, it is actively pursuing additional partnerships, the company noted . With the cornerstone alliance with Microsoft, G42 anticipates broadening its collaboration scope with global partners in AI and cloud computing.
The UAE-based firm opted to disengage from China to attract more investments from the US. This decision coincided with Biden’s recent revision of regulations to impede China’s access to US AI chips and chipmaking tools. This was part of efforts to limit Beijing’s advancement in chip manufacturing due to national security concerns.
These regulations aim to prevent the export of more advanced AI chips to China, among others. Washington has intensified its oversight of Beijing amid apprehensions that its technological progress could bolster China’s military capabilities.
The newly revised regulations, detailed in a 166-page document, were enacted in early April. They clarify various aspects, including extending restrictions on chip exports to China to encompass laptops containing such chips.
The Commerce Department has indicated its intention to continually update these restrictions on technology exports to China.