Microsoft Plays High Stakes in Tech Cold War with Emirati AI Deal

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Microsoft plans to announce a $1.5 billion investment in G42, an artificial intelligence giant in the United Arab Emirates, on Tuesday, in a move by the Biden administration to push China out in a big way from Washington and Beijing. An agreement was signed using technological influence in the Gulf as a means of combat. region and beyond.

Under the partnership, Microsoft will allow G42 to sell Microsoft services that use powerful AI chips, which are used to train and fine-tune generative AI models. In return, the G42, which is under scrutiny from Washington for its ties to China, will use Microsoft’s cloud services and engage in security arrangements set out in detailed discussions with the US government. It places a series of safeguards on AI products shared with the G42 and includes an agreement to remove Chinese equipment from G42 operations, among other measures.

“When it comes to emerging technology, you can’t be in both China’s camp and our camp,” said Gina Raimondo, the Commerce Secretary, who was on hand to discuss security arrangements for this and other partnerships. Traveled to UAE twice.

The deal is highly unusual, Microsoft President Brad Smith said in an interview, reflecting the U.S. government’s unusual concern about protecting the intellectual property behind AI programs.

“The United States is naturally concerned that the most important technology is protected by a trusted American company,” said Mr. Smith, who will take a seat on the G42’s board.

The investment could help the US push back against China’s growing influence in the Gulf region. If the move succeeds, the G42 will be brought to the US and cut ties with China. The deal could also become a model of how US firms can leverage their technological leadership in AI to lure countries away from Chinese tech while reaping huge financial rewards.

But the issue is sensitive, as US officials have raised questions about the G42. That year, a congressional committee wrote a letter urging the Commerce Department to consider whether to subject the G42 to trade sanctions for its ties to China, including partnerships with Chinese firms and employees. which came from government-linked companies.

In an interview, Ms. Raimondo, who has been at the center of efforts to block China from acquiring advanced semiconductors and the equipment to make them, said the deal “does not allow for the transfer of artificial intelligence, or AI models, or GPUs” — the processors needed to develop AI applications — and “ensure that these technologies can be developed, secured and deployed securely.”

While the UAE and the US have not signed a separate agreement, Ms Raymundo said, “We have been briefed extensively and we are satisfied that this agreement is in line with our values.”

In a statement, Peng Zhao, Group Chief Executive of G42, said “Through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge AI technologies at scale.”

The US and China are racing to increase technological influence in the Gulf, where hundreds of billions of dollars are up for grabs and big investors, including Saudi Arabia, are expected to spend billions on the technology. In the rush to diversify away from oil, many of the region’s leaders have set their sights on AI — and are happy to push the United States and China away from each other.

Although the UAE is an important diplomatic and intelligence partner of the United States, and one of the largest purchasers of American weapons, it has rapidly expanded its military and economic ties with China. Part of its home surveillance system is built on Chinese technology and its telecommunications works on hardware from Chinese supplier Huawei. That has unnerved US officials, who often visit the Persian Gulf nation to discuss security issues.

But U.S. officials are also concerned that the proliferation of powerful AI technology critical to national security could eventually be used by China or engineers linked to the Chinese government, if not properly safeguarded. Last month, an American The Cybersecurity Review Board has slammed Microsoft over a hack in which Chinese attackers gained access to the data of high-ranking officials. Any major leaks — for example, of the G42 selling Microsoft AI solutions through China to companies based in the region — would run counter to policies of the Biden administration that have sought to limit China’s access to advanced technology. Who is

“It’s one of the most advanced technologies the U.S. has,” said Gregory Allen, a researcher at the Center for Strategic and International Studies and a former U.S. defense official who worked on AI. Must be practical. “

For Microsoft, a deal with the G42 provides potential access to vast Emirati wealth. The company, whose chairman is Sheikh Tahnoon bin Zayed, the emirate’s national security adviser and younger brother of the country’s ruler, is a core part of the UAE’s efforts to become a major AI player.

Despite a name sensationally derived from “The Hitchhiker’s Guide to the Galaxy,” in which the answer to “life’s ultimate question” is 42, the G42 is deeply rooted in the Emirati security state. It specializes in AI and recently worked to create an Arabic chatbot called Jais.

G42 also focuses on biotechnology and surveillance. Several of its executives, including Mr. Zhao, were affiliated with Dark Matter, an Emirati cyber-intelligence and hacking firm that employs former spies.

In its letter this year, the Chinese Communist Party’s bipartisan House Select Committee said Mr. Zhao was connected to a vast network of companies that “materially support” the technological development of the Chinese military.

The origins of Tuesday’s agreement go back to White House meetings last year, when top national security aides raised with tech executives the question of how to encourage business arrangements that would strengthen U.S. relationships with firms around the world. deepen, especially in which China is also interested.

Under the deal, the G42 will stop using Huawei telecom equipment, which the US fears could provide a backdoor for Chinese intelligence agencies. The agreement further obligates the G42 to seek permission before sharing its technologies with other governments or militaries and prohibits it from using the technology for surveillance. Microsoft will also have the authority to audit G42’s use of its technology.

The G42 will use AI computing power at Microsoft’s data center in the UAE, sensitive technology that cannot be sold in the country without an export license. Access to computing power will likely give the G42 a competitive edge in the region. The second phase of the deal, which could prove even more controversial and has yet to be negotiated, could transfer some of Microsoft’s AI technology to the G42.

The New York Times previously reported that US intelligence officials have expressed concerns about the G42’s relationship with China in a series of classified documents. Biden administration officials have also urged their Emirati counterparts to sever the company’s ties to China. Some officials believe that the US pressure campaign has had some results, but they are concerned about the less clear relationship between the G42 and China.

A G42 executive previously worked at Chinese AI surveillance company Yitu, which has extensive ties to China’s security services and operates facial recognition-enabled monitoring across the country. The company also has ties to BGI, a Chinese genetics giant whose subsidiaries were blacklisted by the Biden administration last year. Mr. Zhao also led a firm that was involved in launching and operating a social media app, TwoTalk, in 2019, which US intelligence agencies said was an Emirati spying tool to harvest user data. is used for

In recent months, G42 has agreed to scale back some of its China ties, including divesting its stake in TikTok owner ByteDance and divesting Huawei technology from its operations, according to U.S. officials.

Edward Wong Cooperation reporting.

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