Microsoft to invest $1.5 billion in UAE AI firm

The deal between Microsoft and Abu Dhabi-based G42 signals a pivot for the Gulf state toward Washington.
The deal between Microsoft and Abu Dhabi-based G42 signals a pivot for the Gulf state toward Washington.

Summary

The deal between the tech giant and Abu Dhabi-based G42 signals a pivot for the Gulf state toward Washington.

Microsoft Corp. will invest $1.5 billion in a technology company backed by the United Arab Emirates, a deal that includes an intergovernmental pact to ensure artificial intelligence security as the U.S. and China increasingly compete for influence in the Gulf.

Relations between the U.S. and U.A.E. have been strained in recent years over Abu Dhabi’s growing ties to China and its technology firms. The agreement between one of America’s biggest tech players and Abu Dhabi-based G42 signals a pivot for the Gulf state toward Washington.

Terms of the deal or a valuation of G42 weren’t disclosed, as the firms announced the agreement Tuesday. Microsoft President Brad Smith will join the Abu Dhabi firm’s board and G42 will use the U.S. firm’s cloud services for its AI applications, the companies said. 

The partnership also aims to create “a skilled and diverse AI workforce" for the U.A.E. and create a $1 billion fund for developers, the firms said.

The U.A.E. has set a goal of becoming a world leader in artificial intelligence and recently held talks with OpenAI chief executive officer Sam Altman about investing in a multitrillion-dollar initiative that would boost the world’s chip-building capacity and expand its ability to power AI, The Wall Street Journal reported.

As part of those discussions, Altman spoke with the U.A.E.’s Sheikh Tahnoun bin Zayed al Nahyan, who chairs G42. He is also the country’s national security adviser and brother of the U.A.E. ruler, Sheikh Mohamed bin Zayed.

In October, G42 announced a partnership with OpenAI, which is behind AI systems such as ChatGPT, to “deliver cutting-edge AI solutions to the U.A.E. and regional markets." G42 in August unveiled its own Arabic large-language model, the technology behind ChatGPT.

Microsoft is one of the biggest investors in OpenAI and has a major customer base in the U.A.E. The U.S. firm opened two large cloud datacenters in the country in 2019, and last year said it would tie up with G42 to introduce “sovereign" cloud offerings that could secure the data of government-related companies, which generally offer the biggest contracts for Western companies selling in the U.A.E.

The deepening of commercial ties reflects a broader realignment of diplomatic interests. Mohamed, the U.A.E. leader, has tried to court the U.S., China and Russia in recent years in a bid to diversify his country’s economy away from its dependence on oil and draw foreign investment.

The policy has at times frustrated U.S. governments, which have put pressure on the U.A.E. to cut ties with China—particularly Chinese telecom firms such as Huawei Technologies—to continue to access U.S. technology.

Growing ties to China have clouded the sale of advanced F-35 jet fighters to the U.A.E. and the construction of a secret Chinese military base near Abu Dhabi nearly upended the U.S. relationship in 2021. Emirati officials said they believed it was a purely commercial port.

Since then, the U.A.E. has shifted toward Washington, deepening commercial ties in green energy and technology. The change in direction has come as the U.A.E. has pushed the U.S. to sign a formal defense agreement. 

Abu Dhabi was one of the Arab states that helped provide intelligence to the U.S. and Israel over the weekend in fending off an attack from Iran on Israeli territory.

China’s bid to gain influence in the Middle East accelerated last year when it brokered a deal to restore relations between Iran and Saudi Arabia, which had gone seven years without ties.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
more

MINT SPECIALS