G42 ‘will run its AI applications and services on Microsoft Azure’ as part of the deal.

Microsoft plans to invest $1.5 billion in an artificial intelligence company based in the United Arab Emirates in exchange for a minority stake and a board of directors seat for Microsoft Vice Chair and President Brad Smith.

The Redmond, Wash.-based tech giant and G42 plan “to co-innovate and deliver advanced AI solutions with Microsoft Azure for various industries and markets across the Middle East, Central Asia and Africa,” Microsoft said in a blog post Tuesday. G42 plans to expand its existing commitment to Microsoft Cloud offerings deployment and migrate to Microsoft Azure.

“With the breadth of the Microsoft Cloud and its differentiated AI capabilities, the deal significantly advances G42’s strategy of delivering generative AI and next-generation infrastructure and services for a range of customers across financial services, healthcare, energy, government and education,” according to Microsoft.

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Microsoft Makes AI Investment

CRN has reached out to Microsoft and G42 for comment.

In G42’s online post about the investment, the company said it “will run its AI applications and services on Microsoft Azure and partner to deliver advanced AI solutions to global public sector clients and large enterprises.”

“Microsoft’s investment in G42 marks a pivotal moment in our company’s journey of growth and innovation, signifying a strategic alignment of vision and execution between the two organizations,” G42 Chairman Sheikh Tahnoon bin Zayed Al Nahyan said in the post. “This partnership is a testament to the shared values and aspirations for progress, fostering greater cooperation and synergy globally.”

The chairman is also known as the UAW’s national security adviser, son of UAE founder Sheikh Zayed bin Sultan Al Nahyan and brother of UAE President Sheikh Mohamed bin Zayed Al Nahyan. The International Consortium of Investigative Journalists (ICIJ) describes the chairman as “the key person behind UAE-orchestrated cyberwarfare against dissidents and people and institutions in other countries, including the United Kingdom. … as well as intelligence cooperation with top global and regional powers, including the U.S., Russia and Israel.”

G42’s Group CEO Peng Xiao added in the post that “this partnership significantly enhances our international market presence, combining G42’s unique AI capabilities with Microsoft’s robust global infrastructure.”

The New York Times has described Xiao and other G42 executives as “associated with a company called DarkMatter, an Emirati cyber-intelligence and hacking firm that employs former spies.”

Both organizations made binding Intergovernmental Assurance Agreements (IGAAs) between each other with consultation from the governments of the United States and UAE, according to G42.

Microsoft says the agreements promise the companies will “apply world-class best practices to ensure the secure, trusted, and responsible development and deployment of AI.” The companies will comply with U.S. and international laws and regulations around trade, security, business integrity and other areas.

“Our two companies will work together not only in the UAE, but to bring AI and digital infrastructure and services to underserved nations,” Microsoft’s Smith said in the G42 post. “We will combine world-class technology with world-leading standards for safe, trusted, and responsible AI, in close coordination with the governments of both the UAE and the United States.”

Microsoft will make G42’s Arabic Large Language Model (LLM), Jais, available in its Azure AI model catalog. The two companies will invest $1 billion into a fund to “support the development of a skilled and diverse AI workforce and talent pool that will drive innovation and competitiveness for the UAE and broader region,” according to Microsoft.

G42 was an early Microsoft Cloud for Sovereignty implementation partner for organizations based in the UAE, according to Microsoft.

The New York Times described the Microsoft-G42 deal as “largely orchestrated by the Biden administration to box out China as Washington and Beijing battle over who will exercise technological influence in the Gulf region and beyond.”

The Times also characterized the deal as a potential “model for how U.S. firms leverage their technological leadership in A.I. to lure countries away from Chinese tech, while reaping huge financial awards.”

As part of the agreement, G42 will stop using Huawei telecommunications equipment, according to the Times. Microsoft gets to audit G42’s technology use and G42 promises to seek permission before sharing technologies with other governments and militaries.