- Satya Nadella wants to prove that he is the most insightful dealmaker in the AI space.
- Microsoft just invested $1.5 billion in United Arab Emirates company G42 to end its relationship with China.
- G42 is said to be connected to a chip venture led by OpenAI, Microsoft’s other major AI business.
Satya Nadella needs to win the AI war. His tactics to ensure Microsoft’s victory as CEO seem to be getting bolder by the day.
Microsoft’s latest move to accelerate competition in the AI space came this week after it was revealed that it was investing $1.5 billion in G42. G42 is an Abu Dhabi-based AI development company that is gradually building a relationship with OpenAI, the Redmond giant’s key partner in this space.
However, making this happen required some clever maneuvering on Microsoft’s part.
G42 has been a concern for U.S. lawmakers since it first partnered with OpenAI in October. The Emirati company’s CEO, Peng Xiao, once led a subsidiary of Dark Matter, and the spyware company was previously cited by U.S. law enforcement after three people associated with the company admitted to illegal hacking. He was a target.
G42 also has ties to Huawei, the Chinese tech giant that has been sanctioned by the United States over concerns that its communications equipment could provide surveillance backdoors for the Chinese government. The G-42 denies “any relationship with the Chinese government,” but that hasn’t stopped the White House from making noise about the risks.
However, G42 is reportedly in talks to fund a new chip venture planned by OpenAI head Sam Altman, and Nadella wants G42 taken out of the picture. It seems like there wasn’t.
That’s why, ahead of the $1.5 billion investment, Microsoft reportedly worked closely behind closed doors with the US government and the Group of 42 to provide guarantees for Emirati companies to exit China. Microsoft President Brad Smith, a key lieutenant of Mr. Nadella, will also join the board.
Given China’s huge market, it is unlikely that this decision was made easily for the G42, especially given that the UAE has spent significant time and effort building business relationships with China. But it appears Nadella could offer something even better.
This is just the latest example of Nadella’s clever power play to secure Microsoft’s position as the team to beat in AI.
Since the drama of Altman’s firing and rehiring at OpenAI in November, the Microsoft CEO has diversified a number of his company’s higher-profile bets on AI.
Nadella pulled off a major coup last month when he hired DeepMind co-founder and Inflection AI CEO Mustafa Suleiman and several of his software engineers to lead Microsoft’s new AI division.
The move includes a $650 million payment to Inflection AI, which will allow Microsoft to license Inflection’s AI models. This cash reportedly allowed Inflexion to make payments to investors.
Still, from Microsoft’s perspective, it’s a small price to pay for access to the talent and technology to play games similar to OpenAI.
After investing in Paris-based Mistral AI, Microsoft made a similar bet on its OpenAI rival earlier this year in a deal it described as a “multi-year partnership.” Mistral was valued at $2 billion less than 12 months after its founding in April 2023.
These vast stakes will form part of Nadella’s larger plan to take his rivals to task. Their competitiveness will increasingly depend on their reaction to his schemes.
Axel Springer, Business Insider’s parent company, has a global deal that allows OpenAI to train models based on its media brands’ reporting.
