Microsoft’s deal in UAE may send important US chips, AI technology abroad

Microsoft‘s agreement with UAE-backed G42 raises concerns about the transfer of AI technology, sparking national security debates in the United States. A Republican congressman warns of potential risks, while Microsoft emphasizes adherence to US regulations amid concerns about protecting sensitive technology.

According to Microsoft President Brad Smith, the company’s high-profile agreement with the United Arab Emirates-backed AI firm G42 could result in the transfer of advanced chips and tools. A senior Republican congressman warned that this could have national security implications.

Smith said that the sales agreement, many of which are being reported here for the first time, could move on to a second phase that involves exporting important parts of AI technology, such as model weights, which are the most important part of AI systems, and determining how powerful they are. Smith said that the second phase doesn’t have a set start date.

The United States has said that AI systems could be dangerous to national security because they could make it easier to make chemical, biological, and nuclear weapons. People who made the biggest AI systems had to give the U.S. government information about them in October when Biden was in office.

The U.S. Department of Commerce must approve the deal before it can proceed. The people in charge of Microsoft said that the agreement has protections to keep Chinese companies from using their technology to train AI systems. However, the public hasn’t seen those steps, and some U.S. lawmakers are unsure of their suitability.

Some lawmakers are concerned that two private companies have been holding talks behind closed doors about the terms and safety measures for transferring U.S. technology.

Congress calls for action on national security concerns over Microsoft-G42 deal

Congress still hasn’t gotten a full briefing from the executive branch on this agreement, even though it has big effects on national security, Michael McCaul, the Republican chairman of the U.S. House of Representatives’ foreign affairs committee. “Because the Chinese Communist Party has interests in the UAE, I worry that the right safeguards are not in place to keep sensitive U.S. technology safe from Chinese espionage.”

The Commerce Department already requires notification and, in some cases, export licenses before sending AI chips abroad. However, the Microsoft-G42 deal demonstrates that U.S. laws aren’t as good as they should be as regulators try to keep up with how quickly technology changes.

At the moment, there are no rules that stop the export of AI models, but this week, McCaul and a group of lawmakers from both parties introduced legislation that would make it clearer that U.S. officials have the power to do so. Microsoft executives said that the company is open to discussing a new set of laws that would govern the sharing of AI technology. They also said that the deal with G42 requires the UAE company to follow U.S. rules as they change. Fundamentally, our focus is on ensuring the safe and secure global movement of American technology, according to Smith.

Last month, Microsoft and G42 announced their deal. It was said to bring G42 closer to the United States and increase the influence of American technology in a strategic race with China. Microsoft is investing $1.5 billion in G42, and Smith, the company’s president, will sit on its board.

The companies didn’t say what technologies they’d send to the UAE or other countries, or what security measures they’d use. This is the first time they have documented some of those details. The main goal of the deal is for Microsoft and G42 to work together to bring AI technology to places where neither could do it as well on their own. The deal that the two companies announced in Kenya on Wednesday demonstrates this.

The Microsoft-G42 deal is an agreement between two companies in which each must provide their government security guarantees. However, the U.S. and UAE do not have a direct agreement that governs the transfer of sensitive technologies. Microsoft executives said that the two companies might try to bring these technologies to markets other than the UAE, such as Turkey and Egypt.

Smith stated that there are still numerous details to resolve in the agreement, including safeguarding the “AI model weights.” These are the most important parts of an AI model that determine how it responds to questions or prompts. To get those weights, you have to train an AI model with a lot of data, which often costs a lot of money.

Smith stated that the most promising technical methods to encrypt model weights while they’re in use won’t be available for at least another year.

For example, Smith said that Microsoft has thought about a “vault within a vault” as an alternative way to protect its technology. This would entail physically dividing sections of data centres, housing AI chips, and model weights, and restricting physical access.

Smith said, “I think by the time we’re done, we’ll have a regulatory regime or trade export control approach that will work for a lot of people, not just Microsoft and G42.”

Microsoft-G42 Deal: ‘Know Your Customer’ Rule Bars Chinese Companies from AI Training

Microsoft executives said that as part of the deal, G42 will have to follow a “know your customer” rule to see who is using Microsoft’s technology. They won’t let Chinese companies use it to train AI models. U.S. regulators have proposed a similar rule, but they have not yet implemented it.

“When it comes to advanced technologies, we made the business decision to work with U.S. companies.” We are very clear that to do that, we will have to follow the rules set by our partners and the government, specifically the export control rules,” said Talal Al Kaissi, an executive in charge of partnerships for G42’s AI work.

Microsoft said that under the terms of the deal, it would be able to fine G42 money and make them follow the rules in arbitration courts in London. That means Microsoft wouldn’t have to go through the UAE’s legal system to make sure G42 followed through with its promises. If G42 breaks the agreement, Microsoft said it could seize its assets in many countries. It’s still not clear how U.S. Commerce Secretary Gina Raimondo will allow the deal to go forward. Smith said that the rules are “informal” and that “with this Secretary of Commerce, it’s pretty clear whether she’s for or against something.”

A spokesperson for the Commerce Department said in a statement that any transfers of technology would be subject to export controls. These controls would include “currently in force licensing requirements” for AI chips as well as “potential future controls.”