Microsoft has entered into an agreement to plough $1.5 billion (£1.1 billion) into Abu Dhabi’s artificial intelligence firm, G42. This deal represents yet another significant investment in AI technology by Microsoft, highlighting the increasing cooperation between the United States and the United Arab Emirates (UAE).
Through this deal, Microsoft secures a minority share in G42 and a board position for its Vice-chair and President, Brad Smith. The agreement was reached subsequently after G42 ended partnerships with Chinese hardware suppliers, attracting the scrutiny of US legislators.
Abu Dhabi’s standing as a key centre for AI will be consolidated by this investment, reflecting the immense technological ambitions of the oil-rich emirate. Furthermore, it demonstrates the shift in Silicon Valley’s perspective of the Gulf region, which was once regarded as an accessible funding source and is now esteemed as a legitimate tech collaborator.
Commenting on the significance of the technology, Smith remarked, “We’ve taken this first step in tight alignment with the governments of both the UAE and the United States. The subsequent steps will follow in a similar fashion,”
When questioned about Microsoft’s strategic decision following G42’s decision to cut ties with China G42’s CEO, Peng Xiao responded, “I would rather concentrate on our decision to team up with Microsoft to widen our global competencies. There’s minimal emphasis on decisions we decided against.”
With this partnership, G42 will utilize Microsoft’s cloud platform Azure “as the bedrock for the creation and launch of AI services we offer to all our clients”, Xiao further explained.
Smith disclosed that the firms envisage collaborating on expansion of data centres in other nations at a later phase, and also initiating a $1 billion fund for AI developers.
“This considerable investment by Microsoft is a decision made after careful deliberation,” Smith noted. “It represents our company’s faith in the UAE as a country, in G42 as a firm, and in Peng as its Chief Executive Officer.”
G42, presided over by UAE’s influential national security advisor, Sheikh Tahnoon bin Zayed al-Nahyan, and supported by Abu Dhabi’s sovereign investor Mubadala, serves a vital role in realising Abu Dhabi’s AI aspirations. G42’s portfolio spans from data centres to healthcare and includes an Arabic large language model named, Jais.
Abu Dhabi’s ambitious strategy and considerable wealth have attracted a host of AI visionaries. MGX, an investment corporation devoted to AI ventures, was recently inaugurated. OpenAI’s CEO, Sam Altman, is a repeat visitor, frequently liaising with UAE investors such as Sheikh Tahnoon about a project to enhance chip manufacturing, expected to cost billions of dollars.
Microsoft, headquartered in Seattle, is OpenAI’s primary collaborator after investing $13 billion into the fledgling company, mostly through Microsoft cloud credits. The launch of OpenAI’s ChatGPT chatbot in November 2022 has placed Microsoft at the heart of an AI explosion. Microsoft views the G42 investment as a stepping stone to other areas. Smith suggested that this collaboration could significantly hasten the introduction of AI services within the Global South.
Microsoft’s CEO, Satya Nadella, sees maintaining a competitive edge in AI as a vital component in outperforming competitors and encroaching on Google’s stronghold on search. Nadella has strived to monopolise the market through substantial investment – in the previous month, Microsoft negotiated a $650 million deal to recruit the founders and numerous researchers and engineers from AI start-up Inflection.
Over the past 18 months, during a period of frantic investment, Microsoft has been the highest investor. Investment in generative AI surged approximately fourfold between 2022 and 2023, as reported by PitchBook, a private market data supplier. The majority of the $27 billion accumulated by AI start-ups the previous year came from major tech firms. In addition to Microsoft’s $10 billion investment in OpenAI, both Amazon and Google penned multibillion-dollar contracts with Anthropic, another AI company headquartered in San Francisco. – Copyright The Financial Times Limited 2024.