In a move that highlights the growing technology competition between the United States and China, Microsoft announced a $1.5 billion investment in Abu Dhabi-based AI company G42. This strategic investment gives Microsoft Vice Chairman and President Brad Smith a seat on his G42 board of directors.
The investment comes as U.S. politicians express concerns about the G42’s relationship with China. In January, the bipartisan House Select Committee on the Chinese Communist Party proposed placing G42 on the Entity List, which would restrict the company’s access to sensitive U.S. technology, similar to the situation with Huawei since 2019. sent a letter.
The United Arab Emirates finds itself in the balance of relations with the United States and China. The UAE has traditionally worked closely with the United States, but in recent years it has strengthened ties with China, raising concerns in Washington. The UAE president attended an economic forum in Russia last year, and the country is stepping up military cooperation with China.
Chinese investors are also turning to the UAE for business opportunities amid rising tensions with the United States. Last year, an Abu Dhabi-backed fund invested $738.5 million in Chinese luxury EV maker Nio.
The G42’s ties to Chinese companies, particularly Huawei, Beijing Genomics Institute (BGI), and Tencent, have raised eyebrows in the United States. The company’s CEO, Peng Xiao, previously worked at DarkMatter, a company known for developing surveillance tools.
Microsoft’s investment represents support for the G42, which aims to strengthen AI development while reducing the group’s ties with China. If finalized, Microsoft will become G42’s official cloud partner and move UAE companies’ data platforms to Microsoft Azure. The move is consistent with G42’s strategy to minimize its China portfolio, including distancing itself from TikTok’s parent company ByteDance.
In return, Microsoft has gained significant market access in the UAE and is deploying AI and Azure technologies across a variety of sectors including finance, healthcare, energy, government, and education. Additionally, the partnership will launch a $1 billion fund to improve AI skills in the UAE and wider region.
The agreement underscores the growing difficulty for tech companies to remain neutral amid U.S.-China tensions. Even the UAE, which aims to be neutral, is being forced to choose sides in the ongoing technology race.
