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Top Republican lawmakers have asked the White House to order an official intelligence community assessment of the national security risks posed by Microsoft’s $1.5bn investment in G42, a UAE artificial intelligence company.
In a letter to national security adviser Jake Sullivan, Michael McCaul, the Republican head of the House foreign affairs panel, and John Moolenaar, head of the House China committee, said the deal warranted “special scrutiny” as one of the “most consequential investments by a US technology firm in the Middle East in decades”.
Microsoft in April agreed to invest $1.5bn in the Abu Dhabi group, in a deal enabled by the US government as part of an arrangement that involved G42 stripping out hardware from Huawei, the Chinese telecommunications company, and the UAE agreeing to remove Huawei equipment from some areas considered sensitive.
Oil-rich Abu Dhabi has been seeking to access US technology, harbouring ambitions to become a global leader in AI. But the deal has raised concerns on Capitol Hill and among some US national security officials because it involves the transfer of cutting-edge semiconductors to the UAE, which has long had ties with Beijing.
McCaul and Moolenaar said they shared the goal of limiting Chinese influence, but were “deeply concerned by attempts to move quickly to advance a partnership that involves the unprecedented transfer of highly sensitive US-origin technology” without congressional consultation or clear regulations.
The lawmakers urged the National Intelligence Council to prepare an assessment of any ties between G42 and China. They noted that UAE ruler Sheikh Mohammed bin Zayed al-Nahyan had recently travelled to Beijing where, according to Chinese state media, he discussed deepening AI co-operation with President Xi Jinping.
G42 has publicly distanced itself from China. In December, chief executive Peng Xiao said it “cannot work with both sides” and that it was cutting its ties to Chinese suppliers. In February, G42 said its technology investment arm, 42XFund, had sold all its stakes in Chinese companies.
Bloomberg reported this week, however, that G42’s Chinese investments were now being managed by Lunate, a new Abu Dhabi-based investor and asset manager. Lunate and G42 are part of the expanding business empire overseen by UAE national security adviser Sheikh Tahnoon Bin Zayed al-Nahyan, who also chairs G42.
One person familiar with the matter said Lunate was managing the Chinese assets previously held by 42XFund, and insisted that the investment vehicle did not own them.
G42 in a statement said 42XFund “has divested from all its investments in China”, but declined to disclose to who the stakes had been sold, saying the “divestment details are under NDA and not for public consumption”.
It declined to comment on the lawmakers’ letter.
Microsoft said it was “working closely” with the National Security Council and the US commerce department, and that “national security will continue to be a principal priority”.
The NSC said the administration had been in “regular dialogue” with lawmakers to “ensure they are appraised of opportunities and risks associated with digital infrastructure”, and that Sullivan looked forward to continued engagement, including with McCaul.
Yousef al-Otaiba, the UAE’s ambassador to Washington, said the Gulf state had “made substantial progress with the US to strengthen the security and control of critical technologies between both countries”.
“We have co-ordinated closely with the administration and Congress through this process, briefing and applying feedback from the committee, other members of Congress and various federal agencies,” Otaiba said in a statement to the Financial Times.
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