📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Microsoft to invest $1.5 billion in Emirati AI firm G42 for minority stake

Published 04/16/2024, 12:37 AM
Updated 04/16/2024, 04:25 AM
© Reuters. FILE PHOTO: Microsoft logo is seen at the Mobile World Congress (MWC) in Barcelona, Spain February 27, 2024. REUTERS/Bruna Casas/File Photo

DUBAI (Reuters) -Microsoft is investing $1.5 billion in United Arab Emirates-based artificial intelligence firm G42, giving the U.S. giant a minority stake and a board seat, allowing the two to deepen ties amid the global battle for tech dominance.

As part of the deal, which the two companies said was backed by assurances to the U.S. and UAE governments over security, G42 would use Microsoft (NASDAQ:MSFT) cloud services to run its AI applications.

The partnership comes amid Washington's efforts to hobble Beijing's technological advances, with the United States adding four Chinese companies to an export blacklist for seeking to acquire AI chips for China's military. The United States has also been concerned over deepening ties between China and the Gulf states, including the UAE.

Amid U.S. concerns over its relationship with Chinese businesses, G42 had divested its investments in China and began the lengthy task of pulling out Chinese hardware, accepting constraints imposed on it by the United States to work with U.S. companies, it said in February.

Microsoft and G42, in separate statements on Tuesday, described their assurances to the U.S. and UAE governments as a first of its kind agreement to ensure the secure, trusted and responsible development and deployment of AI. Microsoft said it was binding. The size of the stake Microsoft was taking was not disclosed.

Abu Dhabi sovereign wealth fund Mubadala and American private equity firm Silver Lake hold stakes in G42, whose chairman, Sheikh Tahnoon bin Zayed Al Nahyan, is the UAE National Security Advisor and a brother to the president.

Microsoft President Brad Smith, who will take a seat on G42's board, said: "We will combine world-class technology with world-leading standards for safe, trusted, and responsible AI, in close coordination with the governments of both the UAE and the United States."

The New York Times said the deal places a series of protections on the AI products shared with G42, including an agreement to strip Chinese gear out of the Emirati firm's operations. G42 will cease using Huawei telecom equipment, which the U.S. fears could provide a backdoor for Chinese intelligence agencies, the paper said.

G42 and Microsoft said they would jointly bring advanced AI and digital infrastructure to countries in the Middle East, Central Asia and Africa.

The two companies have collaborated multiple times over the last year, and G42 said it would use Microsoft's Azure data centres as part of its AI infrastructure to boost regional adoption.

© Reuters. FILE PHOTO: Microsoft logo is seen at the Mobile World Congress (MWC) in Barcelona, Spain February 27, 2024. REUTERS/Bruna Casas/File Photo

G42's Chief Executive Peng Xiao previously worked for company owned by Emirati cybersecurity firm DarkMatter, which hired former spies and was contracted by the UAE cyber security agency.

"Microsoft’s investment in G42 marks a pivotal moment in our company's journey of growth and innovation, signifying a strategic alignment of vision and execution between the two organizations," Sheikh Tahnoon said in the G42 statement.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.