Microsoft to Invest $1.5 Billion in Leading AI Company G42 in the UAE
In a significant move, Microsoft is set to invest $1.5 billion in G42, a top artificial intelligence company based in the United Arab Emirates (UAE). Prior to this investment, the Abu Dhabi-headquartered company had reached an unusual agreement with the United States government – to disinvest from China and terminate any cooperation with China’s (CCP) entities.
According to reports from Bloomberg, the agreement was reached after behind-the-scenes negotiations between the U.S. government and the Middle Eastern company. G42 agreed to divest from China and pivot towards U.S. technology.
G42 is a leading enterprise driving AI development in the UAE and has faced scrutiny due to suspicions of connections with blacklisted Chinese companies and the CCP.
As Washington seeks to restrict CCP access to AI technology, Microsoft’s investment will align this important Middle Eastern company with the United States.
As part of the agreement, Microsoft’s President Brad Smith will join G42’s board of directors, enabling G42 to utilize the American software maker’s Azure cloud for developing AI applications.
Smith, in a conversation with G42’s CEO Shawn Zhang as cited by Bloomberg, mentioned, “Microsoft has received strong encouragement from the U.S. government in advancing this process. This reflects the U.S. government’s recognition of the importance of the relationship between the two countries, and the continued encouragement of responsible companies like G42 and Microsoft to truly lead the way in not only the technology itself, but also world-leading security and responsible AI standards.”
In the later stages of the deal, Microsoft will host some of its applications in G42’s data centers, using this relationship as a way to reach out to customers in Africa and Central Asia, Smith revealed.
He stated, “There are markets today where neither Microsoft nor any American tech company truly have data centers. This collaboration can swiftly introduce cloud computing and AI to global southern markets and may be ten years faster than other ways.”
Shawn Zhang mentioned that Microsoft’s investment is an extension of the existing cooperation between the two companies. The U.S. tech giant will acquire a minority stake in G42, though he declined to disclose financial terms or reveal how much of G42’s spending would be on Microsoft’s cloud services.
Sources familiar with the negotiations indicated that last year, the U.S. Department of Commerce’s Bureau of Industry and Security held talks with G42, reaching an understanding. They said that as per the agreement, G42 agreed to reduce its business in China, or else face punitive measures from Washington.
G42 stated that the company has been following a business strategy since 2022 that is entirely consistent with not engaging with Chinese companies in line with our American partners.
The Abu Dhabi company’s business spans from cloud computing to autonomous vehicles. It is part of the $1.5 trillion empire of the UAE’s National Security Advisor, Sheikh Tahnoon bin Zayed Al Nahyan.
This marks the latest example of Washington’s increased focus on AI and semiconductor industry development in the Middle East, with Saudi Arabia and the UAE competing to become the primary tech hub in the region.
Microsoft and G42 will also establish a $1 billion fund for developers.