White House Might Probe into Microsoft-G42 Deal over Security Concerns

• The White House has been urged to look into Microsoft's $1.5 billion investment in UAE-based AI company, G42.
• The deal was announced back in April and even then authorities had their suspicions.
• G42 is run by Peng Xiao, a Chinese businessman who is also the former CEO of Pegasus.
• The company is believed to be well-connected with many other Chinese firms, and the Chinese military and intelligence.

Microsoft's $1.5 billion investment in UAE-based artificial intelligence (AI) company G42 has come under scrutiny. Two House committee chairs have sent a public letter to the White House to look into the deal and ensure that Microsoft is not using this as an opportunity to transfer sensitive technology to China.

The letter was penned by republican representatives Michael McCaul and John Moolenaar, chairmen of the House Foreign Affairs Committee and Select Committee on the Chinese Communist Party.

"This deal may be one of the most consequential investments by a US technology firm in the Middle East in decades. Should this deal proceed further, we must be clear-eyed about the risks." - Open Letter

They aren't the only ones concerned about this deal. UAE's AI minister has also admitted that China's trying to get its hands on US technology is a very valid concern, especially given the current relationship between the two countries.

About the Deal

The deal was announced in April this year and immediately sparked controversies. US authorities are worried that G42 has had friendly ties with China. Here are a few more concerns:

• The company works with US-blacklisted firms like Huawei
• It is well-connected with many other Chinese firms,
• It has a bunch of Chinese employees
• It maintains ties with the Chinese military and intelligence.

Last but not least, G42 is run by Peng Xiao, a Chinese businessman who is also the former CEO of Pegasus.

The allegations were all denied by Xiao himself and several steps were taken to minimize the risk of Chinese influence.

• An agreement was signed that required G42 to get rid of all Chinese gear and equipment
• It is also required to cut ties with all Chinese entities
• G42 must give up its stake in TikTok (which is owned by a Chinese company called ByteDance).
• It also promised to safely develop whatever new technology it is working on
• The company will need to seek permission if it needs to share any data with a government or military
• Lastly, G42 will let Microsoft audit how its technology is used.

But despite all these precautions, it looks like these weren't enough for the authorities to believe.

Microsoft's Soft Spot For China

The reason why Microsoft is under so much scrutiny is because it's known to have a soft spot for China. Owing to its huge population, China is a huge market, one that Microsoft doesn't want to miss out on.

While other tech companies like Google are blocked (either completely or partially) in China, Microsoft continues to operate smoothly because it attends to everything the Chinese authorities ask of it.

For example, it has a separate version of Bing for China that shows censored results. This arrangement has received a lot of criticism from the industry but it doesn't seem to bother Microsoft. So it's natural for the authorities to believe that it's willing to do anything to stay on the good side of China.

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