Microsoft Corp. announced today that it’s investing $1.5 billion in G42, a UAE-based artificial intelligence developer.

The cloud computing and software giant will receive a minority stake in G42 as part of the transaction. Additionally, Microsoft Vice Chair and President Brad Smith is joining G42’s board.

The Financial Times reported the investment “required negotiation” with the Biden administration. As part of the deal, G42 reportedly agreed to remove hardware made by Huawei Technologies Co. Ltd. from its artificial intelligence infrastructure. Separately, Bloomberg reported today that G42 last year reached an understanding with the U.S. Commerce Department to scale back its presence in China.

G42, officially Group 42 Holding Ltd., launched in Abu Dhabi about six years ago. Last August, it opened-source Jais, a large language model with 13 billion parameters that can process Arabic and English text. The model is based on the Transformer neural network architecture that underpins most advanced LLMs.

Following the $1.5 billion investment announced today, G42 will use Microsoft’s Azure cloud platform to support its AI development efforts. The company plans to move its “data platform and other essential technology infrastructure” to Azure. G42 will also use the cloud platform to deliver AI software to customers: last year, it inked a partnership with Microsoft to make its Jais language model available on Azure.

The companies’ partnership extends to a number of other areas as well. Microsoft and G42 will jointly establish a $1 billion developer fund to foster AI skills in the UAE and beyond. Further down the road, the companies plan to collaborate on a data center infrastructure initiative in emerging markets.

“By bringing expanded low latency datacenter infrastructure to emerging markets, Microsoft and G42 will help accelerate digital transformation across key industries in those regions,” Microsoft Chief Commercial Officer Judson Althoff wrote in a blog post today. “This will provide countries across the Middle East, Central Asia and Africa with expanded access to services and technologies that will allow them to address the most challenging business concerns while ensuring the highest standards of security and privacy.”

The deal bolsters Microsoft’s already significant presence in the AI startup ecosystem. The company is the primary backer of OpenAI, having provided the ChatGPT-4 developer with more than $10 billion worth of cloud infrastructure and capital over the past few years. More recently, Microsoft hired most of the staffers at LLM developer Inflection AI Inc., one of OpenAI’s best-funded rivals.

The tech giant’s AI investment strategy focuses not only on LLM startups but also its Azure platform. Last November, Microsoft announced plans to deploy an internally-designed machine learning accelerator called Maia 100 in its cloud data centers. As part of the same initiative, the company is rolling out a custom liquid cooling system to dissipate the heat generated by the new AI chips. 

Photo: Microsoft