G42, UAE-based AI firm, cuts ties with China over U.S. security risks

G42 CEO Peng Xiao onstage at the Fortune Global Forum in November. Katarina Premfors

In the AI arms race, the world’s superpowers are increasingly forcing prospective allies to pick sides—the U.S. or China. And this week, a major Emirati technology company threw its lot in with the U.S.

UAE-based G42, which the Biden administration has flagged as a national security risk over its ties to Chinese companies and government agencies, announced it would sever ties with Chinese hardware suppliers, according to the Financial Times. G42 will now use hardware from American suppliers to assuage the national security concerns its business dealings with China posed, the company said. 

“For better or worse, as a commercial company, we are in a position where we have to make a choice,” G42’s CEO Peng Xiao told the Financial Times. “We cannot work with both sides. We can’t.”

G42 has business agreements with several top U.S. technology companies, including Microsoft and OpenAI. In November, the New York Times reported on alleged links between G42 and China. The Times said U.S. national security personnel had warned G42 and Emirati intelligence officials that they feared China was using its relationship with the company to further its own espionage against the U.S. Officials from the U.S. government also warned that G42 may have been used to gain access to cutting-edge AI technology and to the genetic information of American citizens through donated COVID tests, according to the Times. 

Xiao said G42 had always handled data carefully. “We make sure there is no leakage of sensitive information from our data center link in the U.S.,” he told Fortune executive editor Matt Heimer at the Fortune Global Forum in Abu Dhabi last month. “If the U.S. counterparts ever share any data with us, we are accountable for ensuring that data is kept safe and sound here.” 

Under its new policies, Xiao said, G42 will phase out hardware purchases from Huawei, the Chinese technology company that the U.S. believes is closely tied to the country’s government. Huawei had previously supplied G42 with servers and other equipment used in data centers. Huawei is currently blacklisted in the U.S. for its ties to China’s ruling party, which the company denies; it was also the subject of export controls that sought to limit Chinese companies’ access to advanced semiconductor technology. Some U.S. legislators have recently called for tighter sanctions, after Huawei released a new phone in September that featured a new chip American officials had sought to keep out of Chinese hands. To appease the U.S. government and safeguard its existing relationships with American companies, G42 is winding down its relationship with Huawei and other Chinese partners that may pose security risks.  

“The impression we are getting from [the] U.S. government and U.S. partners is, we need to be very cautious,” Xiao said. “In order for us to further our relationship—which we cherish—with our U.S. partners, we simply cannot do much more with [previous] Chinese partners.” 

G42’s ties to Chinese companies

G42 also has ties to Chinese biotech firm BGI Genomics and owns $100 million worth of shares in TikTok owner ByteDance, among other business relationships. TikTok’s control by a Chinese company has long caused consternation among U.S. officials who suggest the Chinese Communist Party can use it to spy on Americans. ByteDance has always maintained that user data is free from government intervention. BG Genomics is a subsidiary of a larger Chinese genomics company BGI Group, which has been accused of trying to collect genetic and biometric data on U.S. citizens via COVID tests donated to the state of Nevada at the height of the pandemic. 

A notable portion of G42’s work with Chinese companies was in AI research, a field that has become a hot-button issue over the past year. The U.S. and China are in the midst of a tech cold war that some analysts believe Beijing is winning. The U.S., however, appears to have developed more advanced chips and is trying to maintain that advantage by imposing export controls limiting the technology China can access. Xiao also cited the U.S.’s lead in the arena as a reason to drop Chinese AI partners. “Frankly speaking, they’re not leaders in this domain,” he said. 

Meanwhile, G42 has developed increasingly close ties to the leading AI firms in the U.S. In addition to Microsoft and OpenAI (which have a close relationship of their own), G42 in the past has worked with chipmakers Nvidia and Cerebras. G42 and Cerebras recently released an Arabic language AI model with generative AI capabilities. 

The United Arab Emirates has made developing cutting-edge AI technology a priority, as the country looks to take a bigger role on the international stage. In 2019 the UAE’s cabinet approved a long-term, government-wide AI strategy, called the 2031 National AI Strategy. The project, spearheaded by AI minister Omar Sultan Al Olama, aims to integrate the technology across critical aspects of the government, turn the country into a world leader in AI research, and supply data to firms. 

“The UAE realizes that the oil of the future is data and will invest into creating a robust data infrastructure,” the country’s AI plan reads. 

As the UAE’s AI ambitions have grown, the country has often turned to the U.S. to supply it with the leading technology. The U.S. had always been hesitant to provide such resources because of the UAE’s ties to China, forcing it to deepen them in order to access the technology it sought. With Xiao’s distancing from China it appears this geopolitical equivalent of the chicken or the egg has ended.