Microsoft's cooperation with G42 involves two phases. In the first phase, Microsoft limits the transfer of sensitive technologies to G42. The second phase involves exporting sensitive US-origin technologies to the UAE, which is still under negotiation and requires stronger "national security guardrails" than the first phase.

G42 will use Microsoft's Azure cloud platform to run its AI applications and services, enabling the provision of advanced AI solutions to global customers. The collaboration also includes an Intergovernmental Assurance Agreement to ensure the secure, trusted, and responsible development and deployment of AI technologies.

G42, a UAE-based AI company, plays a significant role in the Kenya Digital Investment Program. In collaboration with Microsoft, the company will lead the arrangement of an initial $1 billion investment for various components of the program. One of the priorities is the establishment of a state-of-the-art green data center that will be run by G42 and its partners. The data center will operate Microsoft Azure in a new East Africa Cloud Region. Other aspects of the initiative include local-language AI model development, an East Africa Innovation Lab, and collaboration with the Kenyan government to ensure safe and secure cloud services across East Africa.

U.S. lawmakers are concerned about Microsoft's $1.5 billion investment in UAE-based AI firm G42 due to potential national security risks and the company's historic ties to China. They request an intelligence briefing before the deal proceeds to the second phase, which involves the transfer of export-restricted semiconductor chips and model weights. Lawmakers highlight the lack of regulations around sensitive AI model exports and fear that companies like G42 might share the technology with U.S. adversaries, such as China.

The Microsoft-G42 deal complies with U.S. laws by adhering to current export control regulations for AI chips and committing to follow potential future controls. Microsoft and G42 have also signed an Intergovernmental Assurance Agreement (IGAA) to ensure secure, trusted, and responsible development and deployment of AI, in coordination with both the U.S. and UAE governments.

The Inter-Governmental Assurance Agreement (IGAA) ensures the secure, trustworthy, and responsible development and deployment of AI between two parties. In the context of Microsoft's investment in G42, the IGAA is aimed at enhancing collaboration, bringing the latest Microsoft AI technology to the UAE and other countries, and working together to bring AI and digital infrastructure to countries in the Middle East, Central Asia, and Africa, while complying with U.S. and international laws on trade, security, responsible AI, and business integrity.

G42's CEO, Peng Xiao, stated that the company has exited all its previous investments in China and no longer needs any presence in the country. He also mentioned that the decision to sever ties with Chinese firms was not easy.