Microsoft Invests $1.5bn in Abu Dhabi’s G42

Microsoft has committed to investing $1.5 billion in G42, an artificial intelligence group based in Abu Dhabi, in a significant move highlighting the expanding cooperation between the United States and the United Arab Emirates (UAE) in the realm of technology.

Under the agreement, Microsoft will acquire a minority stake in G42, and its vice-chair and president, Brad Smith, will secure a seat on the company’s board. This development follows G42’s decision to sever ties with Chinese hardware suppliers, a move that garnered scrutiny from US lawmakers.

The investment is expected to bolster Abu Dhabi’s position as a hub for artificial intelligence and underscores the emirate’s aspirations in the technology sector. It also underscores a shift in perception regarding the Gulf region, which is increasingly viewed as a credible technology partner rather than merely a source of funding.

Brad Smith emphasised the significance of technology for both the US and UAE governments, highlighting the collaborative approach taken in this investment. He stressed the importance of continued collaboration with both governments to advance technology initiatives.

G42’s CEO, Peng Xiao, emphasised that the partnership with Microsoft is focused on developing global capabilities rather than dwelling on past decisions regarding business relationships. He underscored the partnership’s goal of enhancing capabilities on a global scale.

Negotiations with the Biden administration were required for this deal, reflecting concerns from US lawmakers about G42’s previous connections to China and the potential risks associated with data privacy.

In response to these concerns, G42 stated that it engaged with US officials to ensure compliance with US regulations, particularly concerning Chinese technology. As part of this effort, G42 agreed to remove hardware made by China’s Huawei from its systems.

As part of the agreement, G42 will utilise Microsoft’s cloud computing platform Azure as the foundation for developing and deploying AI services for its customers. Additionally, the companies plan to collaborate on building data centres in other countries and will support a $1 billion fund for AI developers.

Chaired by Sheikh Tahnoon bin Zayed al-Nahyan, G42 plays a pivotal role in Abu Dhabi’s AI ambitions and is backed by the sovereign investor Mubadala. The company’s diverse portfolio includes data centres, healthcare, and the development of the Arabic language model called Jais.

Microsoft’s investment in G42 signals its intent to be at the forefront of the AI boom, leveraging partnerships to accelerate the delivery of AI services globally. CEO Satya Nadella views AI dominance as critical for maintaining a competitive edge and challenging rivals like Google in areas such as search.

Microsoft’s substantial investments in AI, including its partnership with OpenAI and recent deals with startups like Inflection, underscore its commitment to securing a leading position in the AI landscape. This move reflects a broader trend of increased investment in AI startups by big tech companies, indicating the growing importance of AI in the technology sector.