Microsoft invests $1.5 billion in an Arab startup in the field of artificial intelligence

First ChatGPT and now G42. The Abu Dhabi-based company cut all ties with China due to Microsoft's investment, which is backed by the US government.

Microsoft is positioning itself broadly. After investing billions in OpenAI (Chat GPT), the American company is expanding its business to the Far East. Microsoft is investing $1.5 billion in developing artificial intelligence in the UAE. G42 is headquartered in Abu Dhabi. But the deal only came about after an agreement was reached with the US government requiring the G42 to end all cooperation with Chinese companies in advance.

The Arab company agreed to completely separate from China and switch to American technology. Due to its ties with China, Microsoft was unable to work with the leading AI company. He was blacklisted.

Microsoft's investment brings a major Middle Eastern company to the US side as Washington seeks to limit China's access to artificial intelligence technologies. As part of the agreement, Microsoft President Brad Smith will join G42's board of directors, and G42 will use the US software maker's Azure cloud for its AI applications.

Microsoft is encouraged by the US government

“The US government has strongly encouraged Microsoft to move forward with this process,” Smith said in an interview with G42 CEO Ping Xiao. “This shows that the US government recognizes the importance of the relationship between the two countries and that it is important to continue to encourage responsible companies like G42 and Microsoft, not only in technology itself, but also in world leaders in security and accountability.” To be at the forefront of artificial intelligence standards.

The Abu Dhabi company has businesses ranging from cloud computing to self-driving cars. It is part of the empire of UAE National Security Advisor Sheikh Tahnoun bin Zayed Al Nahyan, which is worth $1.5 trillion.

Microsoft's investment, an extension of the existing partnership between the two companies, gives the American technology giant a minority stake in G42, said Xiao, who declined to disclose financial terms or specify how much G42 will pay for Microsoft's cloud services. Redmond, Washington-based Microsoft and G42 will also establish a $1 billion fund for developers.

Smith said that at a later stage of the agreement, Microsoft will host some of its own applications in G42 data centers and will use the relationship as a way to reach customers in Africa and Central Asia.

“There are markets today where Microsoft, and no other American technology company, has a real data center presence,” he said. “This is the kind of partnership that could bring cloud and AI to the Global South, perhaps a decade faster than would have been the case otherwise.”

The investment agreement, which was signed during Smith's visit to Abu Dhabi earlier this month, is the result of discussions that spanned a year and included coordination with government officials from both countries. In February, G42's Xiao said in an interview that the company wanted to reduce its presence in China and invest in key Western markets.

This pivot came amid widespread US pressure on companies seen as closely linked to Beijing. Officials in President Joseph Biden's government reviewed more than a half-dozen acquisitions last year, including deals by Mubadala Investment Co., which has a stake in G42, people familiar with the matter said.

G42 is not looking for new investors

G42's partnerships include a partnership with AI developer OpenAI, creator of ChatGPT, which is collaborating with the Gulf company as it expands in the UAE and across the region.

Bloomberg reported last year that San Francisco-based OpenAI — whose largest investor is Microsoft — was in talks with G42 to raise funding for a new chip project, but the current status of those talks is unclear. G42 is not looking for further investment. Xiao said it is looking for additional partnerships. “Through this established relationship with Microsoft, we will be able to work with many global partners in the field of artificial intelligence and cloud computing.”