US Probes Microsoft Deal with Emirati AI Firm Over China Ties

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Republican lawmakers have requested a detailed intelligence assessment from the Biden administration regarding Microsoft’s significant $1.5 billion investment in the UAE-based artificial intelligence firm G42. This request, made in a letter dated Wednesday, is driven by concerns over the potential transfer of sensitive technology and G42’s historical connections with China.

Representative Michael McCaul, who chairs the House Foreign Affairs Committee, and John Moolenaar, leader of the Select Committee on China, have asked for a briefing on the deal, which was first announced in April. They are particularly interested in reviewing the transaction before it progresses to a second phase involving the transfer of export-restricted semiconductor chips and AI model weights—advanced data used to enhance an AI model’s ability to mimic human reasoning.

The lawmakers’ letter highlights a growing concern about the regulations governing the export of sensitive AI technology. There is apprehension that firms like G42 could potentially share critical technologies with U.S. adversaries such as China. “We remain deeply concerned by attempts to move quickly to advance a partnership that involves the unprecedented transfer of highly sensitive, U.S.-origin technology, without congressional consultation or clearly defined regulations in place,” the lawmakers stated in their letter.

In their request, McCaul and Moolenaar have called for an assessment of G42’s connections to the Chinese Communist Party, military, and government before Microsoft’s deal proceeds. They referenced UAE President Sheikh Mohamed bin Zayed Al Nahyan’s recent visit to Beijing, which, according to Chinese state news agency Xinhua, was aimed at discussing cooperation in AI.

Microsoft responded by affirming its close cooperation with the U.S. government, emphasizing that U.S. national security remains a top priority. The White House National Security Council also noted that it has been in regular dialogue with lawmakers about the risks associated with digital infrastructure and looks forward to continued engagement with Chair McCaul.

Spokespeople for G42 and the UAE embassy have not yet commented on the matter. The Chinese Embassy criticized the U.S., claiming that it has repeatedly undermined cooperation between Chinese companies and other nations on unfounded security grounds.

A House Select Committee aide indicated that, based on discussions with Microsoft, the lawmakers anticipate that the deal could lead to the export of highly restricted AI semiconductor chips and tools for training models. Microsoft President Brad Smith had mentioned in May that the G42 deal might eventually involve the transfer of sophisticated chips and tools.

The letter also brought up concerns regarding G42’s previous work in digital surveillance and its past connections with Emirati cybersecurity firm DarkMatter, which was investigated in 2019 for cyber espionage activities.

Despite these concerns, G42 stated in February that it had divested its investments in China and was adhering to U.S. constraints to collaborate with American companies. Previously, G42 had partnerships with Chinese firms such as TikTok owner ByteDance, vaccine developer Sinopharm, and the U.S.-blacklisted biotech company BGO Genomics.

The New York Times reported in April that the Microsoft deal with G42 was partly orchestrated by the Biden administration to counter China’s influence. Commerce Secretary Gina Raimondo confirmed that the deal did not authorize the transfer of AI models or processors to G42 for developing AI applications.

In addition to Microsoft, G42 is backed by Abu Dhabi’s sovereign wealth fund Mubadala, the UAE ruling family, and U.S. private equity firm Silver Lake. G42’s chairman, Sheikh Tahnoon bin Zayed Al Nahyan, is also the UAE national security adviser and a brother to the president.

The Commerce Department was reported in May to be considering new rules to restrict the export of proprietary or closed-source AI technologies. Currently, there is no comprehensive oversight preventing U.S. AI giants from selling these technologies to almost any international buyer.