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US lawmakers raise worries about China in Microsoft deal with Emirati AI firm

[July 12, 2024] By Alexandra Alper and Christopher Bing

WASHINGTON (Reuters) -Republican lawmakers asked the Biden administration for an intelligence assessment of Microsoft's $1.5 billion investment in UAE-based artificial intelligence firm G42 over concerns about transfer of sensitive technology and G42's historic ties to China.

Representative Michael McCaul, chair of the House Foreign Affairs Committee, and John Moolenaar, leader of the Select Committee on China, made the request for a briefing in a letter dated Wednesday to White House national security adviser Jake Sullivan, the committees said.

The Republicans said they want the briefing on the deal, announced in April, before it advances to a second phase involving the transfer of export-restricted semiconductor chips and model weights, sophisticated data that improves an AI model's ability to emulate human reasoning.

The letter is a sign of growing concern about the lack of regulations around the export of sensitive AI models, as fears mount that companies like G42 might share the prized technology with U.S. adversaries like China.

"We remain deeply concerned by attempts to move quickly to advance a partnership that involves the unprecedented transfer of highly sensitive, U.S.-origin technology, without congressional consultation or clearly defined regulations in place," the lawmakers said in the letter.

They asked for a U.S. assessment of G42's ties to China's Communist Party, military and government before the Microsoft deal advances. They cited a recent visit by UAE President Sheikh Mohamed bin Zayed Al Nahyan to Beijing to discuss, according to Chinese state news agency Xinhua, cooperation in AI.

Microsoft said in a statement it was working closely with the U.S. government and "U.S. national security will continue to be a principal priority." The White House National Security Council spokesperson said in a statement that the administration has been in regular dialogue with lawmakers to ensure they are aware of the risks associated with digital infrastructure. "National Security Advisor Jake Sullivan looks forward to continuing this engagement, including with Chair McCaul," the person added.

Spokespeople for G42 and the United Arab Emirates embassy did not respond to requests for comment.

The Chinese Embassy said, "The U.S. has repeatedly undermined cooperation between Chinese companies and other countries on trumped-up security grounds."

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Foreign Affairs Committee Chairman Michael McCaul (R-TX) speaks alongside House Republican impeachment managers and other Senate Republicans during a press conference on the impeachment of U.S. Secretary of Department of Homeland Security, Alejandro Mayorkas on Capitol Hill in Washington, U.S., April 16, 2024. REUTERS/Amanda Andrade-Rhoades/File photo

CONCERNS ABOUT CHINA

A House Select Committee aide told reporters on a phone call on Thursday that based on conversations with Microsoft, the lawmakers expect the U.S. company to export otherwise severely restricted AI semiconductor chips to train models as well as AI model weights.

Microsoft President Brad Smith told Reuters in May that the deal with G42 could eventually involve the transfer of sophisticated chips and tools.

The Republicans' letter also cited G42's past "digital surveillance" work as an area of possible risk. The aide highlighted prior connections between G42 staff and Emirati cybersecurity firm DarkMatter, which was the subject of a 2019 Reuters investigation on its cyber espionage activities.

The U.S. has had deepening concerns about China's influence in the Middle East and the United Arab Emirates, a longstanding U.S. ally.

But G42 said in February it divested its investments in China and was accepting constraints imposed on it by the United States to work with U.S. companies. G42 previously had investments or partnerships in China with TikTok owner ByteDance, vaccine developer Sinopharm and U.S.-blacklisted biotech firm BGO Genomics.

The New York Times reported in April that the Microsoft deal with G42 was largely orchestrated by the Biden administration to box out China. Commerce Secretary Gina Raimondo told the paper that the Microsoft deal did not authorize the transfer to G42 of AI models or processors to develop AI applications.

Along with Microsoft, Abu Dhabi sovereign wealth fund Mubadala, the country's ruling family and U.S. private equity firm Silver Lake hold stakes in G42, whose chairman, Sheikh Tahnoon bin Zayed Al Nahyan, is the UAE national security adviser and a brother to the president.

Reuters reported in May that the Commerce Department was considering rules to restrict the export of proprietary or closed-source AI. Currently, nothing is stopping U.S. AI giants from selling them to almost anyone in the world without government oversight.

(Reporting by Alexandra Alper and Christopher Bing; Editing by Lisa Shumaker, David Gregorio and Cynthia Osterman)

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