Microsoft is taking on high-risk missions in the technological cold war with the UAE artificial intelligence deal

Microsoft said on Tuesday it would invest $1.5 billion in G42, the UAE's artificial intelligence giant, in a deal largely orchestrated by the Biden administration to keep China at bay as Washington and Beijing grapple over who will wield tech influence in the UAE. The Persian Gulf region and beyond.

Under the partnership, Microsoft will give G42 permission 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 by Washington over its ties to China, will use Microsoft's cloud services and agree to a security arrangement negotiated in detailed talks with the US government. It places a series of protections on AI products shared with the G42 and includes an agreement to remove Chinese equipment from G42 operations, among other steps.

“When it comes to emerging technology, you can't be in China's camp and our camp at the same time,” said Gina Raimondo, Secretary of Commerce, who twice traveled to the UAE to talk about security arrangements for this and other partnerships.

The agreement is highly unusual, reflecting the US government's extraordinary interest in protecting the intellectual property behind artificial intelligence software, Microsoft President Brad Smith said in an interview.

“It is natural for the United States to be concerned that its most important technology is being guarded by a trusted American company,” said Mr. Smith, who will take a seat on G42’s board.

This investment could help the United States counter China's growing influence in the Gulf region. If these moves succeed, the G42 will be brought into the fold of the United States and its relations with China will be reduced. The deal could also become a model for how American companies can leverage their technological leadership in artificial intelligence to lure countries away from Chinese technology, while reaping huge financial rewards.

But the matter is sensitive, as US officials have raised questions about the G42. This year, a congressional committee wrote a letter urging the Commerce Department to consider whether the G42 should be placed under trade restrictions because of its ties to China, which include partnerships with Chinese companies and employees who come from government-linked companies.

In an interview, Ms. Raimondo, who has been at the heart of efforts to block China from obtaining more advanced semiconductors and the equipment needed to manufacture them, said the agreement “does not allow the transfer of artificial intelligence, or artificial intelligence models,”.” or graphics processing units” — the processors needed to develop AI applications — and “ensures that these technologies can be developed, protected, and deployed safely.”

While the UAE and the US have not signed a separate agreement, Ms. Raimondo said: “We have been briefed extensively and are comfortable that this agreement is consistent with our values.”

In a statement, Ping Xiao, CEO of G42, said, “Through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge AI technologies at scale.”

The United States and China are racing to exert technological influence in the Persian Gulf, where hundreds of billions of dollars are up for grabs, and major investors, including Saudi Arabia, are expected to spend billions on technology. In the rush to diversify away from oil, many leaders in the region have set their sights on artificial intelligence, happy with the rivalry between the United States and China.

Although the UAE is an important diplomatic and intelligence partner of the United States, and one of the largest buyers of American weapons, it has increasingly expanded its military and economic ties with China. Part of its domestic surveillance system is built on Chinese technology, and its communications run on devices from the Chinese company Huawei. This has heightened concerns for US officials, who often visit the Gulf state to discuss security issues.

But US officials also worry that the spread of powerful artificial intelligence technology critical to national security could eventually be used by China or engineers linked to the Chinese government, if not adequately guarded. Last month, the United States A cybersecurity review board has harshly criticized Microsoft over a hack in which Chinese attackers gained access to data from senior officials. Any major leak — for example, through G42's sale of Microsoft's AI solutions to Chinese-established companies in the region — would run counter to Biden administration policies that have sought to limit China's access to cutting-edge technology.

“This is among the most advanced technology that the United States has,” said Gregory Allen, a researcher at the Center for Strategic and International Studies and a former U.S. defense official who has worked on artificial intelligence. “There has to be a very strategic justification for taking it abroad anywhere.” “.

For Microsoft, the deal with G42 provides access to huge Emirati wealth. The company, headed by Sheikh Tahnoun bin Zayed, the UAE's national security adviser and younger brother of the country's ruler, is a key part of the UAE's efforts to become a major player in the field of artificial intelligence.

Despite a name oddly taken from “The Hitchhiker’s Guide to the Galaxy,” where the answer to “life’s ultimate question” is 42, the G42 is deeply rooted in the Emirati security state. She specializes in artificial intelligence and recently worked on building an Arabic chatbot called Jais.

G42 also focuses on biotechnology and surveillance. Many of its executives, including Mr. Xiao, were linked to a company called DarkMatter, an Emirati cyber intelligence and hacking company that employs former spies.

In its letter this year, the bipartisan House Committee on the Chinese Communist Party said Mr. Xiao was linked to an expanding network of companies that “materially support” the Chinese military’s technological advances.

The origins of Tuesday's agreement go back to White House meetings last year, when top national security aides raised a question with tech executives about how to encourage trade arrangements that would deepen U.S. ties with companies around the world, especially those in which China is also interested.

Under the agreement, the G42 will stop using Huawei's telecommunications equipment, which the US fears could provide a back door to Chinese intelligence agencies. The agreement also requires the G42 to obtain permission before it shares its technology with other governments or militaries, and prohibits it from using the technology for surveillance. Microsoft will also have the ability to review the G42's use of its technology.

The G42 will benefit from the artificial intelligence computing power of Microsoft's data center in the UAE, which is sensitive technology that cannot be sold in the country without an export licence. Access to computing power is likely to give G42 a competitive advantage in the region. The second phase of the deal, which may be more controversial and has not yet been negotiated, could transfer some of Microsoft's AI technology to G42.

US intelligence officials have raised concerns about the G42's relationship with China in a series of classified assessments, The New York Times previously reported. Biden administration officials also pushed their Emirati counterparts to cut the company's ties with China. Some officials believe the US pressure campaign has produced some results, but they remain concerned about the less public relations between the G42 and China.

One of the G42 executives previously worked for Chinese AI surveillance company Yitu, which has extensive ties to Chinese security services and runs facial recognition-based surveillance across the country. The company also has ties to Chinese genetics giant BGI, whose subsidiaries were blacklisted by the Biden administration last year. Mr. Xiao also led a company that in 2019 was involved in starting and operating the social media app, ToTok, which US intelligence agencies said was an Emirati spy tool used to collect user data.

In recent months, the G42 has agreed to reverse some of its ties with China, including divesting the stake it took in ByteDance, owner of TikTok, and divesting Huawei technology from its operations, according to US officials.

Edward Wong Contributed to reports.