Microsoft's deal with UAE's G42 sparks fears over true destination of AI exports

US politicos worry that all roads lead to renminbi

Microsoft may end up exporting advanced computer processors, AI model weights, and other key technologies to the Middle East and beyond via the Windows giant's cozy relationship with United Arab Emirates giant G42.

That revelation, which was reported by Reuters today, has made some US politicians even more skeptical about the recently announced business partnership between the pair of corporations.

We note that Microsoft's $1.5 billion investment in G42, unveiled in April, offered few details about the tie-up beyond it being a means to expand Azure's presence in the Middle East, Central Asia, and Africa, and to also equip it with AI capabilities.

The newswire's report this week says, based on an interview with Microsoft President Brad Smith, that a potential second phase of the Microsoft-G42 alliance would see the Windows maker export key AI tech to G42, namely advanced chips and ML tools. Neural network model weights are reportedly included in those tools, something of particular importance as the ability to customize model weights would give G42 even greater control over what a large language model (LLM) emits.

The Microsoft president suggested the IT titan had in place mitigations to keep crucial US tech from widely leaking out, such as enforcing a know-your-customer policy on G42 and putting the AI processors and AI model weights destined for G42 use in isolated parts of datacenters, which Smith called a "vault within a vault." He also said encrypting model weights could be possible after a year or so.

While Smith said there's no timeline in place for the deal, the possibility of it alone has alarmed some US policymakers over concerns about national security, not just with respect to the UAE, but also China. G42 is suspected to have fairly deep ties with the Chinese government, raising suspicions it may become a potential vector for transferring US tech to Beijing indirectly, thereby bypassing export sanctions.

Redmond execs also reportedly told Reuters the biz union could see the pair transfer tech to Turkey and Egypt, further increasing fears it might make its way to China.

Microsoft insists its deal with G42 will "apply world-class best practices to ensure the secure, trusted, and responsible development and deployment of AI" and comply with US law, though House foreign affairs committee chair Michael McCaul (R-TX) isn't convinced.

"Despite the significant national security implications, Congress still has not received a comprehensive briefing from the executive branch about this agreement," the House rep said.

"I am concerned the right guardrails are not in place to protect sensitive US-origin technology from Chinese espionage given the [Chinese Communist Party's] interests in the UAE."

McCaul and other politicians from both his own Republican Party and the Democratic Party are pursuing a bill that would give the President more power on restricting exports of AI models. He has also expressed concerns about the CPU architecture RISC-V, suggesting it should be sanctioned due to its use by Chinese chip designers.

President Biden and Commerce Secretary Gina Raimondo haven't yet blocked the G42 deal, which Smith takes as a good sign that it will ultimately go through. ®

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