Microsoft's $1.5 Billion Investment in AI Firm Allegedly Linked to China Raises Security Concerns

By Thea Felicity

Apr 16, 2024 01:49 PM EDT

The "Microsoft" logo is seen on a tablet screen on December 4, 2012 in Paris.
(Photo : LIONEL BONAVENTURE/AFP via Getty Images)

To solidify its venture into AI, Microsoft has invested $1.5 billion into G42, an artificial intelligence firm headquartered in the United Arab Emirates. 

According to CNBC, this investment was overseen by Microsoft President Brad Smith's appointment to G42's board of directors, marking an expansion of the existing collaboration between the two entities, with Microsoft securing a minority stake in G42.

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US Government's Concern

The partnership between Microsoft and G42, however, came under controversy due to notable government involvement, notably from the US and UAE. This development follows heightened scrutiny on G42 for its alleged links to China, raising concerns about national security and trade regulations.

Microsoft defended the partnership with G42 in a blog, citing that their billion-dollar investment is underpinned by a comprehensive agreement to ensure the responsible development and deployment of AI technologies, aligning with US and international trade, security, and regulatory standards. 

G42 Chairman Sheikh Tahnoon bin Zayed Al Nahya holds the position of national security advisor in the UAE, further accentuating governmental involvement in the deal.

The backdrop of this investment includes allegations made by House Rep. Mike Gallagher, chairman of the US Select Committee on the Chinese Communist Party, urging scrutiny into G42's connections with blacklisted Chinese companies such as Huawei. 

G42 denied these allegations. However, questions linger regarding its affiliations and investments in Chinese enterprises, including ByteDance, the parent company of TikTok.

"In the field of advanced technologies, we have pursued a commercial strategy since 2022 to fully align with our US partners and not to engage with Chinese companies," G42 said at the time.

Beyond the controversy, the Microsoft-G42 alliance is poised to boost technology in the UAE. Similar to Singapore, it aims to position itself as another global hub for innovation, particularly in AI and cryptocurrency. 

READ MORE: US Expands List of Chinese Tech Companies It Says Are Helping China's Military

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