UAE Cancels US Meetings Amid Concerns Over Microsoft-G42 AI Deal

The UAE has unexpectedly cancelled meetings between US congressional staffers and Emirati AI firm G42, amid concerns over the potential transfer of advanced American AI technology to China, further heightening tensions surrounding the scrutiny of G42’s $1.5 billion deal with Microsoft.

Diplomatic fallout and congressional involvement: The abrupt cancellation of the meetings, ordered by the UAE’s ambassador to the US, has raised the prospect of a diplomatic crisis and increased congressional oversight:

• The House Select Committee on China’s spokesperson expressed heightened concerns about the G42-Microsoft deal due to the UAE’s unwillingness to engage in discussions, stating, “Expect Congress to become more involved in overseeing these negotiations.”
• The UAE embassy attributed the situation to a “miscommunication,” emphasizing their regular engagement with committee members and staffers in recent months and asserting that the committee has been kept informed about joint UAE-US efforts to strengthen control over critical advanced technologies.

Concerns over technology transfer and national security: The congressional staffers’ planned meetings were part of a broader agenda to discuss the transfer of sophisticated technology to the UAE and Saudi Arabia, as well as US-China tech competition:

• A July 11 letter from committee chairman John Moolenaar to US National Security Advisor Jake Sullivan, co-signed by House Foreign Affairs chair Michael McCaul, requested a White House intelligence briefing on Microsoft’s investment in G42 before the deal could progress to its second phase, which would involve transferring export-restricted semiconductor chips from Nvidia and sophisticated AI model weights.
• The Biden administration has taken a positive view of the G42-Microsoft deal, citing G42’s severance from China’s Huawei as a major positive factor. However, the administration has also imposed sweeping curbs on AI chip exports, requiring licenses for shipments under a more restrictive policy than the previous Trump administration.

Regional dynamics and tech innovation: The level of interaction between US and other countries’ authorities highlights the complex interplay between technological innovation, international political relationships, and national security issues:

• During a regional visit, a congressional delegation met with Saudi officials who expressed a desire to alleviate US companies’ concerns about the activities of the Chinese government in Saudi Arabia, with the goal of obtaining permission to import advanced American chips.
• The efforts of China hawks in Congress to closely scrutinize the G42-Microsoft deal have particularly sparked controversies, as members of Congress focus on ensuring that sensitive AI developments and products resulting from the agreement will not be diverted by the Emiratis to China.

Broader implications and unanswered questions: The cancellation of the meetings and the heightened scrutiny surrounding the G42-Microsoft deal underscore the growing tensions between the US and its allies in the Middle East, particularly in the context of US-China tech competition and concerns over the potential transfer of sensitive technologies:

• The incident raises questions about the future of US-UAE relations and the potential impact on other technology partnerships between American companies and Emirati entities.
• It remains to be seen how Congress will further involve itself in overseeing such deals and whether the Biden administration will take a more cautious approach to approving the transfer of advanced technologies to countries in the region, given the geopolitical sensitivities and national security implications.