Microsoft makes high-stakes AI play in tech Cold War

It’s investing 2b in UAE firm in deal largely set up by US to box out China in Gulf region

Microsoft on April 16 plans to announce a US$1.5 billion (S$2 billion) investment in G42, an artificial intelligence (AI) giant in the United Arab Emirates (UAE), in a deal 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.

Under the partnership, Microsoft will give G42 permission to sell Microsoft services that use powerful AI chips, which are used to train and fine-tune generative AI models.

In return, G42, which has been under scrutiny by Washington for its ties to China, will use Microsoft's cloud services and accede to a security arrangement negotiated in detailed conversations with the US government.

It places a series of protections on the AI products shared with G42 and includes an agreement to strip Chinese gear out of G42's operations, among other steps.

"When it comes to emerging technology, you cannot be both in China's camp and our camp," said Commerce Secretary Gina Raimondo, who travelled twice to the UAE to talk about security arrangements for this and other partnerships.

The accord is highly unusual, Microsoft president Brad Smith said in an interview, reflecting the US government's extraordinary concern about protecting the intellectual property behind AI programmes.