WASHINGTON/ ABU DHABI
Microsoft President Brad Smith said the tech company’s high profile deal with the United Arab Emirates-backed AI firm G42 could eventually involve the transfer of sophisticated chips and tools.
In an interview with Reuters this week, Smith said the sales accord could progress to a second phase that entails the export of crucial components of AI technology such as model weights, a crown jewel of AI systems that determine how powerful they are. Smith said there is no firm timeline for the second phase.
To move forward, the deal would require the approval of the US Department of Commerce. Microsoft executives said when they announced the deal that there were safeguards to protect the company’s technology and prevent it from being used by Chinese entities to train AI systems.
But those measures have not been made public, and some US lawmakers question whether they are adequate.
The closed-door nature of the negotiations between two private companies over the terms and safeguards on transfers of US technology have left some lawmakers worried.
“Despite the significant national security implications, Congress still has not received a comprehensive briefing from the executive branch about this agreement,” Michael McCaul, the Republican chairman of the foreign affairs committee in the US House of Representatives, told Reuters.
In a statement, a Commerce Department spokesman said any technology transfers would be governed by export controls, “including currently in force licensing requirements” for AI chips and “potential future controls.”
The Commerce Department already requires notifications and, in several regions, export licenses to send AI chips abroad. But the Microsoft-G42 deal highlights gaps in US laws as regulators rush to keep up with fast-moving technology.
Microsoft executives said the company welcomes a debate on a new legal framework governing the transfer of AI technology and that the deal with G42 requires the UAE firm to comply with US regulations as they evolve.
“Fundamentally, what we’re focused on is trying to ensure that American technology can move around the world safely and securely,” Smith said.
When Microsoft and G42 announced the deal last month, it was billed as drawing G42 closer to the US and spreading US technology influence amid strategic competition with China.
Microsoft is investing $1.5 billion in G42 with Microsoft’s president, Smith, taking a seat on its board.
The companies did not give details about which technologies might be transferred to the UAE or other countries nor which specific security safeguards would be put in place. Microsoft would not transfer ownership of its technology to G42 even if the technology ended up housed in data centres abroad built by G42. Cloud computing companies commonly place equipment into data centres rented from other companies.
The broad intent of the deal is for Microsoft and G42 to jointly take AI technology into regions where neither could do so as effectively alone. An early example is a deal in Kenya announced by the two companies on Wednesday.
Microsoft and G42 said in announcing the deal that it included an agreement requiring each to give security assurances to their respective home governments. But it did not disclose the specifics of the security assurances, and there is no direct agreement between the US and UAE governing the transfer of sensitive technologies.
The two companies could seek to transfer those technologies to other markets beyond the UAE, including places such as Turkey and Egypt, Microsoft executives said.
Smith said many of the details of the deal remain to be worked out, including how to protect what are known as AI “model weights,” which is the critical part of an AI model that defines how it responds to questions or prompts. Those weights are obtained by training an AI model with huge amounts of data, often at great expense.
Model weights currently cannot be encrypted while in use, and Smith estimated the promising technical approaches for doing so remain at least a year away.
Smith said Microsoft has considered several alternative options to protect its technology, including a “vault within a vault” that would involve physically separating parts of data centres where AI chips and model weights are housed and restricting physical access.
“I suspect by the time we’re done, we’re going to end up with a regulatory regime or trade export control approach that will be applicable broadly and not just to Microsoft and G42,” Smith said.
Under the Microsoft deal, G42 will also follow a “know your customer” rule to determine who is using Microsoft’s technology and will not allow Chinese firms to use it to train AI models, Microsoft executives said. US regulators have proposed a similar rule, but they have not yet enacted it.
“We adopted a strategic commercial decision to partner with US companies when it comes to advanced technologies. And we’re very clear on the fact that in order to do so, we will need to adhere to the requirements of our partners and government regulatory requirements or export control regulations,” Talal Al Kaissi, an executive who handles partnerships for G42’s AI work, told Reuters.
