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Microsoft is investing $1.5 billion in Abu Dhabi’s AI giant G42. The deal, announced a few hours ago, gives the technology giant a minority stake in the AI company as well as a seat on its board of directors.
While the companies have been working together for quite some time, the massive investment will push Microsoft’s AI technologies at the forefront of G42’s work, taking them to organizations of all sizes in the United Arab Emirates (UAE) and enabling them to build safe AI applications.
The deal has been executed with the involvement of both the U.S. and UAE governments, with many seeing it as a strategic move by the Biden Administration to strengthen its positioning in the region in response to China.
For Microsoft, the collaboration will help expand the reach of its AI and cloud products in the market.
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What to expect from the Microsoft-G42 deal?
Founded in 2018, G42 (Group 42 Holding Ltd.) has established itself as a known tech company focused on both AI research and infrastructure to help businesses take advantage of machine intelligence in what they do.
The company employs more than 20,000 people and claims to have published more than 300 research papers discussing AI-driving solutions to real-world problems.
According to the G42 website, its AI apps empower different industries, including healthcare, public services, energy and finance. On the infrastructure side, it has been working closely with industry partners to maintain cloud computing capabilities and data centers and run these services.
Now, with Microsoft investing $1.5 billion, the partner efforts for infrastructure are likely to revolve around the Satya Nadella-led company. According to a joint statement released by both companies, the deal will see G42 enlist Microsoft as its go-to cloud computing partner and run its AI apps and services on the company’s Azure cloud platform.
“Our two companies will work together not only in the UAE but to bring AI and digital infrastructure and services to underserved nations,” said Microsoft president Brad Smith, who is set to join G42’s board as part of this deal.
Interestingly, many of G42’s apps and services already use generative AI models from Microsoft-backed OpenAI under a partnership announced last year.
Assurances for safe AI development amid political tensions
While it’s not surprising to see a billion-dollar investment in the AI space, this deal stands out for its geopolitical implications and the involvement of governments on both sides.
The companies signed a first-of-a-kind agreement providing assurances to both U.S. and UAE governments that they would apply best-in-class practices to ensure secure, trusted, and responsible development and deployment of AI as well as compliance with “the U.S. and international trade laws and regulations”.
They also promised to work closely and elevate the security and compliance framework of their joint infrastructure as part of the agreement.
These assurances are being seen as the Biden Administration’s way of blocking out China, which reportedly had ties with G42, in the race to strengthen technological influence in the Gulf region.
According to CNBC, back in January, U.S. House Rep. Mike Gallagher, R-Wi., chairman of the U.S. Select Committee on the Chinese Communist Party, called for a close investigation on G42 to see if it maintains ties with blacklisted Chinese companies and whether it should be included on that list too. G42 subsequently denied the claims. It also sold its Chinese investments, including shares in TikTok-owner ByteDance.
Microsoft racks up its third major international investment
For Microsoft, the deal with G42 will help the company extend its presence in the Gulf, allowing it to take its cloud products to more businesses in the region, covering sectors such as public services and healthcare.
“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 that will empower countries and markets to advance their digital agendas by harnessing the power of Cloud and AI,” Samer Abu-Ltaif, Microsoft Corporate Vice President and President for Central and Eastern Europe, Middle East and Africa, said in a statement.
Notably, this is the third major international move from Microsoft in a matter of weeks. Earlier this month, the company announced a new AI hub in London to advance its consumer AI products and committed an investment of $2.9 billion in Japan to increase its hyperscale cloud computing and AI infrastructure.
