(Reuters) -The U.S. government has approved the export of advanced artificial intelligence chips to a Microsoft-operated facility in the United Arab Emirates as part of the company's highly-scrutinized partnership with Emirati AI firm G42, Axios reported on Saturday, citing two people familiar with the deal.
Microsoft (NASDAQ:MSFT) invested $1.5 billion in G42 earlier this year, giving the U.S. company a minority stake and a board seat. As part of the deal, G42 would use Microsoft's cloud services to run its AI applications.
The deal, however, was scrutinized after U.S. lawmakers raised concerns G42 could transfer powerful U.S. AI technology to China. They asked for a U.S. assessment of G42's ties to the Chinese Communist Party, military and government before the Microsoft deal advances.
The U.S. Commerce Department and G42 did not immediately respond to Reuters' requests for comment. Microsoft declined to comment on the report.
The approved export license requires Microsoft to prevent access to its facility in the UAE by personnel who are from nations under U.S. arms embargoes or who are on the U.S. Bureau of Industry and Security's Entity List, the Axios report said.
The restrictions cover people physically in China, the Chinese government or personnel working for any organization headquartered in China, the report added.
U.S. officials have said that AI systems could pose national security risks, including by making it easier to engineer chemical, biological and nuclear weapons. The Biden administration in October required the makers of the largest AI systems to share details about them with the U.S. government.
G42 earlier this year said it was actively working with U.S. partners and the UAE's government to comply with AI development and deployment standards, amid concerns about its ties to China.
Abu Dhabi sovereign wealth fund Mubadala Investment Company, the UAE's ruling family and U.S. private equity firm Silver Lake hold stakes in G42. The company's chairman, Sheikh Tahnoon bin Zayed Al Nahyan, is the UAE's national security advisor and the brother of the UAE's president.