In May, Microsoft and G42, the United Arab Emirates' AI firm, announced plans to spend $1 billion on projects in Kenya. But while some see this partnership as way to help the U.S. combat Chinese influence in the Global South, others are concerned about potential national security threats.

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Microsoft’s partnership with G42, an artificial intelligence firm based in the United Arab Emirates, has drawn concerns among U.S. officials regarding national security. The collaboration, initially valued at $1.5 billion and supported by both the U.S. and UAE governments, aims to fund projects in Kenya. However, apprehensions about transferring advanced AI knowledge to the Middle East and potential risks associated with cybersecurity and human rights have emerged.

Key issues raised include whether the U.S. should permit shipments of advanced AI chips essential to the partnership's data centers. Further complicating matters, the Middle East, including the UAE, Saudi Arabia, Kuwait, and Qatar, falls under a U.S. export control framework originally intended for China. This means that shipping advanced chips or chip-making equipment to these countries without a U.S. government license is restricted.

G42, prominent in the UAE and the wider Middle East for AI development, is mandated to eliminate Chinese company Huawei from its supply chains as part of the deal with Microsoft. However, skepticism remains among U.S. officials about G42's commitment to this requirement, despite the firm hiring an auditor to ensure compliance. Additionally, the broader geopolitical considerations involve U.S. reluctance to lose influence in regions like Africa, where China's Belt and Road initiative has already established deep economic ties.



Microsoft AI deal with G42 at risk over national security fears

Really the key issue here is what a transfer of AI knowledge to the Middle East and beyond. Right. So Microsoft earlier this year announced that it would invest one and a half billion dollars in G 42. This was this landmark deal that was blessed by the United States and UAE governments at the time. But since then there have been concerns cropping up in all corners of Washington. Everything ranging from human rights concerns about you know do we really want to be stripping advanced AI to goal states that have questionable surveillance measures on their constituencies to cybersecurity risks related to Microsoft. You know Commerce Secretary Gina Raimondo's email was hacked last year on a Microsoft server. And the most fundamental question facing U.S. officials right now is whether to approve shipments of the advanced AI chips that Microsoft and G 42 need to actually make these data centers a success. There's gonna be loads of people watching remote technology going. I hear G 42 all the time. G 42 G 42 big numbers. Mackenzie what is G 42. The G 42 is the preeminent AI company in the United Arab Emirates and really in the Middle East writ large. There's Gulf states including not just the UAE but also Saudi Arabia Kuwait and Qatar that are pouring massive amounts of money into AI development. And G 42 is sort of the crown jewel of the UAE AI empire. And particularly the UAE is jockeying with Saudi Arabia over AI and data center leadership. But the U.S. has concerns about the entire region. They had added the Middle East much of the Middle East including all four of those Gulf states to an export controls framework that originally focused on China and restricts U.S. companies from shipping advanced chips or advanced chip making equipment to countries on that list without a license from the U.S. government. And since implementing that rule in October these pretty much slow walked licenses to that region while officials jockey over whether or not to allow companies like the UAE's G 42 to access American technology over concerns that it could also be a backdoor way for China to get access to those tools and chips. But if they don't build the ties with the Middle East then is China going to win out in the global south. Are we going to see this ongoing narrative of a battle just escalate. So that's exactly the concern and the consideration. You know there is so much money going around that the calculation on the part of the Biden administration is if Middle Eastern companies are not spending that money on American companies and American equipment and chips they will spend that money with China. Part of the deal with Microsoft and with G 42 is that G 42 would strip Chinese company Huawei out of its supply chains. Now there are concerns at the Pentagon that maybe they're actually not going to make good on those commitments. And G 42 has hired a third party auditor to say no we actually will and we're going to have an independent party that's going to show you that. There are concerns about how much money they're paying the auditor. You can go down a million rabbit holes here. But the reality is China has decades worth of investment in the Middle East and in the global south. We're at large a large part of our story today focuses on Kenya where China has made inroads for a generation as part of the broader Belt and Road initiative. They have this quote unquote digital silk road where Huawei and the Chinese telecom giant ZTE have invested massive massive amounts of capital across Africa and Central Asia. And this Microsoft G 42 partnership might be the United States best chance at hitting back a little bit.

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