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Microsoft to invest $1.5bn in Abu Dhabi AI group G42

Agreement is latest move by US tech group to extend its reach into fast-growing sector

Microsoft has agreed to invest $1.5 billion in Abu Dhabi artificial intelligence group G42, its latest big bet on the technology that underscores deepening collaboration between the US and United Arab Emirates. Photograph: Michael M. Santiago/Getty Images

Chloe Cornish and George Hammond
Tue Apr 16 2024 - 11:42

Microsoft has agreed to invest $1.5 billion (€1.4 billion) in Abu Dhabi artificial intelligence group G42, its latest big bet on the technology that underscores deepening collaboration between the US and United Arab Emirates.

The agreement gives Microsoft a minority stake in G42, and its vice-chair and president Brad Smith will have a seat on its board. It comes after G42 severed its links to Chinese hardware suppliers, which had been the subject of scrutiny by US lawmakers.

The investment will strengthen Abu Dhabi’s position as an AI hub, and is a sign of the oil-rich emirate’s ambitions in the technology. It also shows how the Gulf, long seen by many in Silicon Valley as an easy source of funding, is increasingly regarded as a credible technology partner.

“Given the importance of the technology and given how important it is to the two countries and two governments, we’ve taken this first step in close collaboration with the governments of both the UAE and the United States,” Smith said. “We will take the next step and following steps in close collaboration with them as well.”

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Asked if the Microsoft deal was a prize for cutting ties with China, Peng Xiao, G42′s chief executive, said: “I would focus on our decision to form this partnership with Microsoft to really develop our capabilities on a global scale. Less focus on what we choose not to do.”

As part of the deal, G42 would use Microsoft’s cloud computing platform Azure “as the backbone for the development and deployment of AI services we provide to all of our customers”, said Xiao.

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Smith said the companies planned to partner at a later stage on building out data centres in other countries. They will also support a $1 billion fund for AI developers.

“Microsoft’s large investment is not something we do without a lot of thought,” Smith added. “And this decision reflects confidence by our company in the UAE as a country, in G42 as a company, and in Peng as its CEO.”

Chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan, who oversees a sprawling business empire, G42 is central to Abu Dhabi’s AI ambitions and is backed by Abu Dhabi sovereign investor Mubadala.

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G42′s companies range from data centres to healthcare, and it has produced an Arabic-language model called Jais.

AI leaders have been increasingly drawn to Abu Dhabi by its grand plans and deep pockets. It recently launched an investment company dedicated to AI deals, called MGX.

Sam Altman, OpenAI’s chief executive, has visited several times, including this month, and has held discussions with UAE investors including Sheikh Tahnoon for a scheme to boost chip production, likely to cost billions of dollars.

Seattle-headquartered Microsoft is OpenAI’s main partner, having invested $13 billion in the start-up, much of it in the form of credits for Microsoft’s cloud.

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Microsoft is positioning itself at the centre of an AI boom following the launch of OpenAI’s ChatGPT chatbot in November 2022. It says it sees the G42 investment as a launch pad to other regions. “By coming together, I think we can accelerate very substantially the arrival of AI services in the Global South,” said Smith.

Satya Nadella, Microsoft’s chief executive, regards AI dominance as critical to getting ahead of rivals, and a way to eat into arch-rival Google’s dominance in search.

Mr Nadella has sought to corner the market by investing heavily. Last month, Microsoft struck a $650 million deal to hire the founders and dozens of researchers and engineers at AI start-up Inflection.

Microsoft has been the biggest spender during an investment frenzy over the past 18 months. According to private markets data provider PitchBook, investment into generative AI roughly quadrupled between 2022 and 2023.

The bulk of the $27 billion raised by AI start-ups last year came from Big Tech companies. As well as Microsoft’s $10 billion investment in OpenAI, Amazon and Google agreed multibillion-dollar deals with Anthropic, another San Francisco-headquartered AI company. – Copyright The Financial Times Limited 2024

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