Microsoft, one of the biggest names in technology and AI, recently announced on Monday, April 15, 2024, that they had invested $1.5 Billion in UAE-based AI firm G42 (Group 42).
This is a major deal since Microsoft will now find it easy to enter the UAE AI market. In addition, G24 (and all its associated companies) will be better able to leverage Microsoft’s AI-powered solutions.
However, one major question arises in my mind – what about China? Didn’t G42 previously make strategic partnerships with China regarding the development of AI?
Moreover, how will China respond to the fact that the USA – one of its main rivals – is now entering the Gulf AI market to compete with its presence directly?
These are some questions I believe will impact the AI market of the UAE – and of the entire world. Therefore, let’s dive deeper and discover how things will be put in motion because of this deal.
Abu Dhabi’s AI Firm G42: What Do We Know So Far?
G42 – also known as Group 42 – is a company from Abu Dhabi that provides AI-centric solutions to the UAE government and various large corporations. It was formed in 2018 and has become one of the leading AI firms in the UAE.
G42 provides AI solutions to companies in various industries like government, healthcare, transportation, finance, hospitality, aviation, and energy. Moreover, it also has dedicated teams that conduct research in AI development across these industries.
Regarding its offerings, G42 offers the following services to both its public and private sector clients:
· Digital infrastructure and cloud computing
· AI research
· High-impact industry solutions
· Investments
The current CEO of G42 is Pen Xiao, the former head of another Emirati cybersecurity company called DarkMatter Group. G42 has several guiding beliefs that it follows, which are:
1. AI can supercharge the world
2. Ignorance is fear’s best friend
3. Mindless action is a costly behavior
4. Win-win is the key to prosperity
5. There is no greatness without courage
6. Perfection is the enemy of good
G42 AI Development and Research
In July 2023, G42 invested $100 million to purchase nine Cerebras supercomputers with four exaflops of computing power.
G42 will use these supercomputers to deploy new advanced AI technology to create AI chatbots and analyze genome data for scientific research.
This comes after the fact that G42 has partnered with BGI Groups (Beijing Genome Institute) to collect the “highest quality genetic data” of UAE citizens. Therefore, G42 is actively working on using AI to analyze people’s genetic data.
Moreover, to expand its AI development and research further, the company partnered with ChatGPT creator OpenAI. In addition, they also bought $100 million in stocks from Chinese AI company ByteDance.
G42: The ToTok Security Scandal
So far, many projects have the G42 tag in them. However, one project was scandalous for the firm – and its future.
In 2019, it launched ToTok, a free-to-use smartphone video and messaging application.
However, the New York Times published an expose in December 2019. Soon, the application was removed from the Google Play Store and the Apple Store. The NY Times expose states this:
"ToTok is used by the government of the United Arab Emirates to try to track every conversation, movement, relationship, appointment, sound and image of those who install it.”
Another accusation against G42 occurred at the same time as the one above. Here, G42 was accused of partnering with Pegasus, a security subsidiary of DarkMatter – previously headed by CEO Pen Xiao.
Moreover, many claimed that Pegasus was hiring ex-CIA and NSA officials to spy on Americans and various Emirati political rivals. However, G42 denied such connections with DarkMatter.
Moreover, the CIA believes that Pen Xiao was originally born and brought up in the USA as a US citizen. However, he soon renounced his US citizenship and got an Emirati one.
Security Concerns Flagged by the USA
In November 2023, the NY Times (again) published an article titled “Warnings Emerge Over Emirati AI Firm G42’s Ties to China.”
This article was published a week after G42 announced their purchase of $100 million in shares of ByteDance. Major US security concerns were flagged in this report. This included the fact that G42 has been diverting advanced US technology to China.
However, this stems from the fact that G42 collects genetic data of US citizens in the UAE with the help of the BGI Group. Moreover, Chinese technology giant Huawei has built G42’s technology infrastructure, which creates more ties with China.
Therefore, it’s possible that G42 and Huawei were working together to surpass the USA in technology by collecting their data.
This is why the United States Department of Commerce imposed export controls on G42 and 13 related companies. This move forced G42 to divest all their shares of ByteDance and other Chinese firms to “reassure US partners.”
Microsoft Investing Billions in G42: What Does It Involve?
Now that you know that the US authorities and the media see G42 in a negative light, we believe that would have been the last of it.
However, the recent announcement that Microsoft is investing $1.5 billion in G42 has received much backlash in the USA. This is mostly because of the anti-USA and pro-China sentiment that G42 has been tagged with by the US media.
Moreover, Brad Smith, Vice Chairman and President of Microsoft – will soon join G42’s Board of Directors. This is what he said regarding his new position:
“Our two companies will work together in the UAE and bring AI and digital infrastructure and services to underserved nations. We will combine world-class technology with world-leading standards for safe, trusted, and responsible AI in close coordination with the UAE and the United States governments.”
How Will G42 Benefit From This Investment?
Microsoft’s investment allows G42 to use its Azure ecosystem to deploy various AI-centric solutions and services to customers. This includes providing AI-centric solutions and research to the Gulf’s private and public sectors.
Microsoft has also stated that this is an investment in the right direction since they want G42 to use their AI LLM (Language Learning Models) to power their research and development of AI solutions. Moreover, this will significantly power the AI workforce in the UAE, which has quadrupled to 120,000 from 2021 to 2023.
Microsoft and G42 assure that they will use the best “world-class” practices to maintain security and trust between the governments.
Therefore, both firms will work together to enhance their security frameworks to maintain better international data security compliances according to the Intergovernmental Assurance Agreement (IGAA).
This is what CEO Pen Xiao has to say regarding this investment:
“Through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge AI technologies at scale. This partnership significantly enhances our international market presence, combining G42’s unique AI capabilities with Microsoft’s robust global infrastructure. Together, we are expanding our operational horizons and setting new industry standards for innovation.
Moreover, Microsoft’s Corporate Vice President Samer Abu-Ltaif had this to say:
“Our investment in G42 is a testament to the thriving and dynamic tech landscape in the UAE and the broader region. This strategic partnership is well-positioned to ignite opportunities for our customers and partners, accelerate innovation, and fuel economic growth. With G42, we will introduce cutting-edge technologies to empower countries and markets to advance their digital agendas by harnessing the power of Cloud and AI.”
How Will This Affect The AI Industry Of UAE And USA’s Rivalry with China?
Regarding G42’s past relationships with Chinese firms, can we say that G42 is partnering with USA over China?
UAE’s Minister of State for AI, Omar Sultan Al Olama, doesn’t want this partnership to be seen in such a competitive light. Regarding AI developments in UAE, he had this to say:
“AI is going to be the new lifeblood, the new foundation for most governments—and for the private sector as well—and we need to have more focused government positions that can look at the impact of the technology and can steer it.” “Moreover, I don’t think a company the size of Microsoft, with the letter and backing of the US government, is going to go into business and invest in a company if there weren’t reassurances that they see eye-to-eye and operate with a similar culture, similar mentality, and similar moral, strategic grounds.”
However, Al Olama emphasizes that the UAE is open to investments and partnerships from all countries. It will not stop all business relations with China “just because the USA said so.” The UAE will always try to maintain peace and healthy business relations with other countries.
Therefore, it’s clear that the UAE will have no hand in the “Cold War between the USA and China.” This statement made by Al Olama reflected this sentiment:
“Any party being excluded from a global conversation is negative, and the reason for that is this technology can go sideways.”
However, China is probably not in a good mood regarding the fact that G42 has sided with the USA instead of them.
The divestment of $100 million in shares of ByteDance bought by G42 was a major blow to the Chinese AI industry. While they have not yet made any official comments, I’m sure they plan something “strategic” up their sleeves.
Conclusion: Is G42 Microsoft’s Golden Goose… Or A Trap Backed By China?
It’s unclear whether Microsoft has made the right move to invest $1.5 billion in G42. The company has tags of data theft scandals and various anti-American partnerships with China.
However, since they cut off all ties with China, the USA can rest assured that G42 – and UAE’s AI industry – is on their side for now. While the UAE will never rule out the possibility of future partnerships with China, their tie with the USA seems to be the right decision for now.
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