Lawmakers Call for Intelligence Probe of Microsoft-G42 Deal

(Bloomberg) — Key Republican lawmakers asked the Biden administration to prepare a formal intelligence community assessment of a budding partnership between Microsoft Corp. and Abu Dhabi AI firm G42, with a focus on the Emirati company’s ties to China.

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Representatives Michael McCaul and John Moolenaar, the chairmen of the House Foreign Affairs Committee and Select Committee on China, respectively, detailed their concerns about the deal in a Wednesday letter to National Security Advisor Jake Sullivan.

“We support your efforts to work hand in glove with U.S. companies like Microsoft to strengthen our dominance in AI; however, we must also be cleareyed about the risks posed by transferring our most critical AI technology particularly when it comes to countries where the PRC is active,” the letter reads.

“The Administration has been in regular dialogue with Members of Congress to ensure they are appraised of opportunities and risks associated with digital infrastructure,” a National Security Council spokesperson said in an emailed statement. “National Security Advisor Jake Sullivan looks forward to continuing this engagement, including with Chair McCaul.”

Microsoft spokesperson David Cuddy said: “We’re working closely with the NSC and Department of Commerce, and US national security will continue to be a principal priority.”

Yousef Al Otaiba, the UAE’s ambassador to the US, said: “We have made substantial progress with the US to strengthen the security and control of critical technologies between both countries.”

Microsoft announced in April that it would invest $1.5 billion in G42. Under the agreement, Microsoft President Brad Smith will join the UAE firm’s board and G42 will use Microsoft’s Azure cloud for its AI applications. The deal was supported by the Biden administration, which is determined to bolster US AI leadership around the world — and see G42 decouple from Chinese companies including Huawei Technologies Co.

But the arrangement quickly attracted scrutiny in Washington, where some officials had already grown wary of G42 over its alleged ties to blacklisted Chinese companies. The concerns range from the possibility of China accessing sensitive American technology to the risks of shipping AI to Gulf states with questionable human-rights records.

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One key question is whether the US will approve shipments of cutting-edge Nvidia Corp. H100 chips for data centers in the Middle East. Officials have been slow-walking those licenses over the past several months, Bloomberg has reported, as they hash out an AI national security strategy for the Gulf.

McCaul and Moolenaar said in their letter that they’ve had “numerous productive conversations” with Microsoft about their worries. But they want to see “significantly more robust” national security guardrails before the US transfers any sensitive technology — including hardware, services and research. They also called for a more formal framework around the export of chips and AI model weights.

In addition to the risks of hardware shipments, some Pentagon officials are also skeptical that G42 will fully decouple from China, a key promise that paved the way for the Microsoft partnership. A new Abu Dhabi investment vehicle called Lunate is taking over management of what was G42’s 42XFund, an entity with stakes in units of Chinese tech giants such as ByteDance Ltd. Lunate, like G42, is part of a business empire overseen by United Arab Emirates National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan.

–With assistance from Dina Bass.

(Updated with NSC comment in fourth paragraph.)

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