Microsoft's recent deal with UAE-backed AI firm G42 could involve the transfer of advanced AI technology, raising concerns about national security implications. Microsoft President Brad Smith highlighted that the agreement might eventually include exporting sophisticated chips and AI model weights, although this phase has no set timeline. The deal, which necessitates US Department of Commerce approval, includes safeguards to prevent the misuse of technology by Chinese entities. However, details of these measures remain undisclosed, prompting scepticism among US lawmakers about their adequacy.

Concerns about the agreement have been voiced by senior US officials, who warn of the potential national security risks posed by advanced AI systems, such as the ease of engineering dangerous weapons. Representative Michael McCaul expressed frustration over the lack of a comprehensive briefing for Congress, citing fears of Chinese espionage through UAE channels. Current regulations require notifications and export licenses for AI chips, but gaps exist regarding the export of AI models, leading to legislative efforts to grant US officials more explicit control over such exports.

Why does it matter?

The deal, valued at$1.5 billion, was framed as a strategic move to extend US technology influence amid global competition, particularly with China. Although the exact technologies and security measures involved are not fully disclosed, the agreement aims to enhance AI capabilities in regions like Kenya and potentially Turkey and Egypt. Microsoft asserts that G42 will adhere to US regulatory requirements and has implemented a 'know your customer' rule to prevent Chinese firms from using the technology for training AI models.

Microsoft emphasises its commitment to ensuring secure global technology transfers, with provisions for imposing financial penalties on G42 through arbitration courts in London if compliance issues arise. While the US Commerce Department will oversee the deal under existing and potential future export controls, how Commerce Secretary Gina Raimondo will handle the approval process remains uncertain. Smith anticipates that the regulatory framework developed for this deal will likely be applied broadly across the industry.