Microsoft has agreed to invest $1.5 billion in Abu Dhabi artificial intelligence group G42, the latest major investment in the technology that underlines deepening cooperation between the US and the United Arab Emirates.
The deal gives Microsoft a minority stake in G42, while chairman Brad Smith will also sit on the board. The deal comes after G42 cut ties with Chinese hardware suppliers, which have come under scrutiny from US lawmakers.
According to the Financial Times, the investment will strengthen Abu Dhabi’s position as a centre for artificial intelligence and is a sign of the oil-rich emirate’s tech ambitions. It also shows that the Gulf, long seen by many in Silicon Valley as an easy source of funding, is increasingly seen as a reliable technology partner.
Microsoft partners with the US and UAE governments
“Given the importance of the technology and how important it is to two countries and two governments, we have taken this first step in close cooperation with the UAE and US governments. We will take the next step and subsequent steps in close cooperation with them,” Smith said.
Asked if the Microsoft deal was a reward for cutting ties with China, G42 CEO Peng Xiao said: “I would focus on our decision to enter into this partnership with Microsoft to really develop our capabilities on a global scale. I would focus less on what we decided not to do,” he said.
$1 billion fund for AI developers
As part of the deal, G42 will use Microsoft’s Azure cloud computing platform as the backbone for developing and delivering its AI services to all of its customers, Xiao said.
Smith said the companies plan to work together to set up data centres in other countries at a later stage. They will also support a $1 billion fund for AI developers.
“Microsoft’s major investment is not something we do without a lot of thought, and this decision reflects the confidence our company has in the UAE as a country, G42 as a company, and Peng as its CEO,” Smith said.
G42’s links to Abu Dhabi’s ruling elite
Chaired by Sheikh Tahnun bin Zayed al-Nahyan, the UAE’s powerful national security adviser, G42 is at the centre of Abu Dhabi’s AI ambitions and is backed by the emirate’s sovereign wealth fund, Mubadala.
G42’s businesses range from data centres to healthcare, and it has already produced a model of the main Arabic language, called Jais.
Microsoft is positioning itself at the centre of the AI boom after the launch of OpenAI’s ChatGPT robot in November 2022, and says it sees the G42 investment as a launching pad for other regions.
“By coming together, I think we can very significantly accelerate the arrival of AI services in the global south,” Smith said.
Big tech giants’ AI mania
Microsoft has been the biggest spender during the investment frenzy of the past 18 months. Its investment in productive AI nearly quadrupled between 2022 and 2023, according to private market data provider PitchBook.
The majority of the $27 billion raised by AI startups last year came from big tech companies.
In addition to Microsoft’s $10bn investment in OpenAI, Amazon and Google struck multi-billion dollar deals with Anthropic, another San Francisco-based AI company.
