US tech giant Microsoft has just invested $1.5 billion in Abu Dhabi-based AI company G42 in a novel deal that speaks volumes about the shifting geopolitical landscape and what it means for private capital.
In return, G42—which is also backed by Silver Lake and Abu Dhabi SWF Mubadala—will give Microsoft a minority stake and a board seat. Both firms will also set up a $1 billion fund for developers.
In a statement, the G42 said the deal is the first of its kind to come with an “intergovernmental assurance agreement” that involves the UAE and US governments. Ostensibly, the agreement is intended to ensure safe responsible development in AI tech. But there’s also an important national security angle for the US.
G4S had also assured the US government that it would cut its links to China and instead pivot to using US technology. The company was previously alleged to have had links to Huawei Technologies, which was blacklisted by the US government in 2019.
The deal comes just a day after the US government gave South Korea’s Samsung a $6.4 billion subsidy to take its advanced chip production to the US. Both agreements come at a time when the US and other regional powers, including the EU and China, are putting resources into securing dominance in chip development and access to AI technology while preventing competitor access.
It is almost inevitable that this struggle will influence the flow of private capital. So while this particular transaction may seem unusual for now, it probably won’t be for much longer.
Featured image by Drew Sanders/PitchBook News
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