Republicans seek probe into Microsoft’s $1.5B UAE G42 investment

Republicans Seek Probe into Microsoft’s $1.5bn Investment in UAE’s G42

Top Republican lawmakers have asked the White House to order an official intelligence community assessment of the national security risks posed by Microsoft’s $1.5bn investment in G42, a UAE artificial intelligence company.

Lawmakers’ Concerns

In a letter to national security adviser Jake Sullivan, Michael McCaul, the Republican head of the House foreign affairs panel, and John Moolenaar, head of the House China committee, emphasized that the deal warranted “special scrutiny.” They described it as one of the “most consequential investments by a US technology firm in the Middle East in decades.”

Details of the Investment

In April, Microsoft agreed to invest $1.5bn in the Abu Dhabi group. This deal was facilitated by the US government as part of an arrangement where G42 removed hardware from Huawei, the Chinese telecommunications company. Additionally, the UAE agreed to remove Huawei equipment from some sensitive areas.

Strategic Interests and National Security Concerns

Oil-rich Abu Dhabi has been seeking access to US technology with ambitions to become a global leader in AI. However, the deal has raised concerns on Capitol Hill and among some US national security officials. They worry because it involves the transfer of cutting-edge semiconductors to the UAE, which has long had ties with Beijing.

Limiting Chinese Influence

McCaul and Moolenaar stated that while they shared the goal of limiting Chinese influence, they were “deeply concerned by attempts to move quickly to advance a partnership that involves the unprecedented transfer of highly sensitive US-origin technology” without congressional consultation or clear regulations.

Call for Assessment

The lawmakers urged the National Intelligence Council to prepare an assessment of any ties between G42 and China. They noted that UAE ruler Sheikh Mohammed bin Zayed al-Nahyan had recently traveled to Beijing. According to Chinese state media, he discussed deepening AI cooperation with President Xi Jinping.

G42’s Stance on China

G42 has publicly distanced itself from China. In December, chief executive Peng Xiao said it “cannot work with both sides” and was cutting its ties to Chinese suppliers. In February, G42 said its technology investment arm, 42XFund, had sold all its stakes in Chinese companies.

G42’s Chinese investments are now managed by Lunate, a new Abu Dhabi-based investor and asset manager. Lunate and G42 are part of the expanding business empire overseen by UAE national security adviser Sheikh Tahnoon Bin Zayed al-Nahyan, who also chairs G42.

Management of Chinese Assets

One person familiar with the matter said Lunate was managing the Chinese assets previously held by 42XFund. This person insisted that the investment vehicle did not own them.

G42’s Statement

G42 in a statement said 42XFund “has divested from all its investments in China.” However, it declined to disclose to whom the stakes had been sold, citing non-disclosure agreements.

Microsoft’s Position

Microsoft stated it was “working closely” with the National Security Council and the US Commerce Department. They emphasized that “national security will continue to be a principal priority.”

White House’s Response

The NSC said the administration had been in “regular dialogue” with lawmakers to “ensure they are appraised of opportunities and risks associated with digital infrastructure.” Sullivan looked forward to continued engagement, including with McCaul.

UAE’s Ambassador’s Statement

Yousef al-Otaiba, the UAE’s ambassador to Washington, said the Gulf state had “made substantial progress with the US to strengthen the security and control of critical technologies between both countries.”

“We have coordinated closely with the administration and Congress through this process, briefing and applying feedback from the committee, other members of Congress, and various federal agencies,” Otaiba said in a statement.