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Microsoft-G42 AI Deal Raises National Security Concerns Over Advanced Chip and Technology Transfer to UAE

Microsoft's deal with UAE-backed AI firm G42 could involve the transfer of advanced chips and AI technology. Concerns have been raised about potential national security implications. Approval from the US Department of Commerce is required for the deal to proceed.

However, this development has raised concerns among senior Republican congressman, who warn of potential national security implications.

Smith, in an exclusive interview with Reuters, disclosed that the sales agreement, which is being reported for the first time, could progress to a second phase that includes exporting crucial components of AI technology, such as model weights. These model weights are considered the crown jewels of AI systems as they determine their power and capabilities. Smith emphasised that there is no fixed timeline for this second phase.

The US government has previously expressed concerns about the national security risks associated with AI systems, particularly in relation to the easier engineering of chemical, biological, and nuclear weapons. In response, the Biden administration mandated that the makers of the largest AI systems share details about their technology with the US government.

To proceed with the deal, approval from the US Department of Commerce is required. While Microsoft executives have assured that there are safeguards in place to protect the company's technology from being used by Chinese entities, the details of these measures have not been made public. This lack of transparency has raised doubts among lawmakers about the adequacy of these safeguards.

Lawmakers have expressed alarm over the closed-door nature of the negotiations between the two private companies and the lack of information regarding the terms and safeguards surrounding the transfer of US technology. Michael McCaul, the Republican chairman of the foreign affairs committee in the US House of Representatives, voiced his concerns about the agreement's potential impact on sensitive US-origin technology and its vulnerability to Chinese espionage.

The Microsoft-G42 deal has also highlighted gaps in existing US laws and regulations concerning the export of AI technology. While the Commerce Department already requires notifications and export licenses for AI chips, there are currently no regulations restricting the export of AI models. In response, lawmakers have proposed legislation to grant US officials explicit power to regulate the export of AI models.

Microsoft executives have expressed their willingness to engage in a debate about a new legal framework governing the transfer of AI technology. They have also emphasised that the deal with G42 requires compliance with evolving US regulations. Smith stated that the company's focus is to ensure the safe and secure movement of American technology worldwide.

Beyond the UAE, the Microsoft-G42 deal aims to expand US technology influence and strengthen ties amid strategic competition with China. Microsoft's $1.5 billion investment in G42 includes Smith taking a seat on its board. While specific details about the technologies to be transferred and the security safeguards remain undisclosed, Microsoft clarified that it would not transfer ownership of its technology to G42, even if it were housed in data centers abroad.

The deal between Microsoft and G42 intends to jointly bring AI technology to regions where neither company could do so effectively alone. An early example of this collaboration is a recent deal in Kenya. The agreement includes security assurances to respective home governments, although the specifics of these assurances have not been disclosed. There is currently no direct agreement between the US and UAE governing the transfer of sensitive technologies.

Microsoft and G42 have the potential to expand their technology transfer to other markets beyond the UAE, including countries like Turkey and Egypt. However, many details of the deal are still being negotiated, including how to protect AI "model weights," which are critical components of AI models. Microsoft is exploring various options, such as physically separating data centers and restricting access to ensure the security of these model weights.

The Microsoft-G42 deal has far-reaching implications, and it is expected that a regulatory regime or trade export control approach will be established to govern the transfer of AI technology. Under the agreement, G42 is required to adhere to the requirements of Microsoft and US regulatory frameworks.

As the deal awaits approval from US Commerce Secretary Gina Raimondo, the provisions surrounding the transfer of technology remain informal. However, Smith expressed confidence in Raimondo's ability to make clear decisions regarding the deal.

  • Microsoft's deal with UAE-backed AI firm G42 could involve the transfer of advanced chips and AI technology.

  • Concerns have been raised about potential national security implications.

  • Approval from the US Department of Commerce is required for the deal to proceed.


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