With recent big moves in the generative AI market, Microsoft continued to invest heavily in other GenAI vendors around the world at a rapid pace.
The tech giant on April 15 revealed plans to invest $1.5 billion in UAE-based AI vendor G42.
In exchange for the investment, Microsoft will own a minority stake in G42 and Vice Chairman and President Brad Smith will have a seat on G42’s board of directors.
G42’s Arabic Large Language Model (LLM) Jais will also be available in the Azure AI Model Catalog. This model is based on G42’s collaboration with his AI vendor Cerebras, Abu Dhabi’s Mohammed bin Zayed University of Artificial Intelligence, and his medical information technology provider, an Abu Dhabi-based healthcare provider with its own medical reporting LLM. Developed in collaboration with Med42.
Microsoft’s investment in G42 comes days after the cloud provider announced a new hub in London focused on consumer AI products and research, with the vendor planning to invest $16 million in French AI startup Mistral. This took place one month after the announcement.
Microsoft said G42 will run its AI applications and services on the Microsoft Azure cloud, and the two companies will work together to provide digital infrastructure to countries in the Middle East, Central Asia, and Africa where G42 has founded.
global diversification
The investment, which Microsoft spent in 2023 to incorporate partner OpenAI’s technology into its product line, signals the tech giant’s focus this year on expanding its global footprint into Europe and the Middle East. ing.
And Microsoft appears to be stabilizing after management turmoil within OpenAI in November 2023, with CEO Sam Altman fired and later rehired by the board.
“Once you decide to diversify your bets, if you want to think about it holistically, think about diversifying not just on the ‘Silicon Valley Peninsula’ but around the world,” said Corey Johnson, an analyst at Futurum Group. “It will be.” “Microsoft is increasingly well-positioned as it relates to the global deployment of AI.”
These moves also allow Microsoft to continue to make multiple GenAI models available in Azure Studio, allowing more AI providers to build models on Azure infrastructure while meeting the needs of regions outside of the United States. You’ll be able to leverage models trained in the region’s primary languages. region.
Gartner analyst Arun Chandrasekaran said: “This expands its footprint around the world while localizing it to the point where it is useful and practical for enterprise customers in the region.” .
Data centers and political motives
Independent AI analyst Marc Becu said the investment in G42 also speaks to the lack of data centers internationally.
“Some data center experts are saying, ‘We don’t have enough space and we can’t build fast enough,'” Becku said.
Dramatic advances in AI technology are increasing the demand for data centers. However, this trend comes with challenges, including ever-increasing demands on electricity due to a lack of computing power.
In September, Microsoft and G42 revealed plans to offer sovereign cloud services in the UAE and expand Microsoft’s existing data center infrastructure in the country.
This investment is helping Microsoft achieve its plans.
There is also a geopolitical dimension to this investment.
“The United States is actively courting the Middle East through a kind of partnership between American companies and UAE companies,” Chandrasekaran said.
As part of the investment announcement, Microsoft said that the governments of the United States and the United Arab Emirates support the companies’ investment and partnership, and that both governments were consulted during the development of the deal.
Johnson said giving financial support to the G42 would also help the US keep certain products out of China as the technology battle between the two countries intensifies.
China and the United States are at odds over the development of emerging technologies in the Middle East. Additionally, there are concerns within the U.S. government that companies with ties to China could gain access to U.S. AI systems.
The G42 has come under increasing scrutiny from the US government over its relationship with China.
In January, U.S. lawmakers asked the Commerce Department to consider trade restrictions against the G-42 because of ties between UAE companies and some blacklisted Chinese companies, particularly Huawei.
This came after US spy agencies began warning authorities about G42 last year.
In response to those warnings, G42 began phasing out some of its Chinese hardware, including chips and processors, in November and December. It also sold stakes in Chinese companies such as ByteDance, the owner of TikTok.
The vendor also strengthened its U.S. relationship by partnering with OpenAI last October to use OpenAI’s generative AI models in the UAE and other international markets.
some challenges
Chandrasekaran said that while the benefits of this partnership outweigh the challenges, there are some things Microsoft needs to consider.
First, Microsoft will need to further establish a local presence, at least in some overseas regions, he said.
Additionally, other countries may have their own AI ambitions to foster other local AI providers to compete with Microsoft, he added.
Despite these factors, Microsoft has proven over the years that it carefully scrutinizes each investment, Beckue said.
“They’re very protective of their intellectual property,” he says. “They have a great franchise. It would be a big risk to do something stupid without really vetting it.”
Microsoft also said it will invest an additional $1 billion in a developer fund to help grow a skilled and diverse AI workforce and talent pool in the UAE.
Esther Ajao is a TechTarget editorial news writer and host of a podcast covering artificial intelligence software and systems.
