Microsoft's UAE Deal Could Transfer Key US AI Tech Abroad Amid National Security Concerns

Microsoft Corp. (NASDAQ:MSFT) President Brad Smith revealed that the company’s deal with UAE-backed AI firm G42 might involve transferring advanced AI technology.

What Happened: Smith indicated that the agreement could eventually include exporting crucial AI components like model weights, which are essential for AI systems’ power, Reuters reported on Thursday. However, there is no set timeline for this phase.

U.S. officials have expressed concerns about potential national security risks, including the possibility of AI systems facilitating the creation of weapons. The deal requires approval from the U.S. Department of Commerce.

Republican Congressman Michael McCaul (R-Texas) voiced concerns about the adequacy of safeguards to protect sensitive U.S. technology from Chinese espionage. He emphasized the need for comprehensive briefings from the executive branch.

Microsoft executives stated that the deal includes measures to prevent misuse of their technology by Chinese entities. However, the specifics of these measures have not been disclosed publicly.

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The deal, announced last month, aims to enhance U.S. technology influence amid strategic competition with China. Microsoft is investing $1.5 billion in G42, with Smith joining its board.

Why It Matters: The deal between Microsoft and G42 is significant in the context of recent developments in AI and technology transfer regulations. Recently President Joe Biden emphasized the need for AI companies to “earn our trust” and called for “responsible innovation.”

In April, Microsoft announced a significant investment of $1.5 billion in G42, a leading AI firm in the UAE. This move secured a board seat for Brad Smith, underscoring the strategic importance of this partnership.

Earlier, in March, Microsoft had already made headlines with its telecom and 5G partnership with Etisalat. This collaboration aimed to reshape the industry through AI innovations, reflecting Microsoft’s broader strategy to expand its technological footprint globally.

Price Action: On Thursday, Microsoft’s stock closed 0.34% higher at $430.52, according to Benzinga Pro. The stock’s 52-week high stands at $432.97, while the low is $309.45.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari