Microsoft’s $1.5 billion investment in UAE-based artificial intelligence (AI) company G42 has sparked significant scrutiny and concern, particularly from US lawmakers. Republican representatives Michael McCaul and John Moolenaar, chairs of the House Foreign Affairs Committee and Select Committee on the Chinese Communist Party, have sent a public letter to the White House urging a thorough review of the deal.
They are wary that Microsoft’s investment could potentially lead to the transfer of sensitive technology to China, given G42’s past associations and current operations.
The deal, announced in April, has raised alarms due to G42’s historical connections with Chinese entities, including blacklisted firms like Huawei, as well as its substantial Chinese employee base and ties to Chinese military and intelligence sectors.
These factors have fueled concerns that G42, led by Chinese businessman Peng Xiao, could be a conduit for technology exchange that might compromise US interests.
In response to these apprehensions, G42 and Microsoft have implemented several safeguards. G42 committed to severing ties with Chinese entities, divesting its stake in TikTok, and ensuring rigorous data security measures, including allowing Microsoft to audit its technology usage. Despite these assurances, skepticism persists among US authorities about the effectiveness of these precautions in preventing unwanted technology transfers.
The scrutiny intensifies against the backdrop of Microsoft’s broader strategy in China, where it operates under strict regulatory oversight, including offering a censored version of Bing. This compliant stance towards Chinese authorities has raised questions about Microsoft’s willingness to accommodate Chinese demands to maintain access to the lucrative Chinese market.
Ultimately, the concerns voiced by lawmakers reflect broader geopolitical tensions and fears of technology leakage to China, amidst a backdrop of strained US-China relations. The outcome of this scrutiny could influence future US policy on tech investments in sensitive sectors and regions, underscoring the high stakes involved in balancing economic interests with national security concerns.
