Washington Played a Key Role in Microsoft’s Mega AI Deal with G42 A relatively modest deal, at least by Microsoft’s standards, is causing significant geopolitical reverberations on Tuesday.
The tech behemoth is injecting $1.5 billion into G42, an Emirati artificial intelligence company. At first glance, it might seem like just another move by Microsoft to secure a position in a rapidly expanding AI market, similar to its engagements with OpenAI and other entities.
However, the specifics of this transaction reveal a collaboration between the Biden administration and Microsoft aimed at diminishing Beijing’s influence in Gulf region tech, amid the ongoing competition between the U.S. and China for AI supremacy.
The agreement stipulates that G42 can offer Microsoft-powered AI services, while in return, it will utilize Microsoft’s Azure cloud services for its AI solutions.
More significantly, G42 has committed to removing equipment sourced from Chinese companies like Huawei from its infrastructure, eradicating potential backdoors for Chinese intelligence agencies, a concern raised by U.S. officials.
This move is intended to align an influential AI company with American interests. G42, chaired by Sheikh Tahnoon bin Zayed, a prominent figure in the Emirates’ security apparatus and brother of the country’s ruler, has established itself as a key player in the Gulf region and beyond. Additionally, its CEO, Peng Xiao, previously associated with DarkMatter, an Emirati cybersecurity firm linked to former intelligence operatives.
However, G42’s prior ties with Huawei and other Chinese entities raised alarms among U.S. officials, who feared it could facilitate Chinese access to advanced technology and sensitive data. (At one point, there were discussions of imposing sanctions on G42.) Broader concerns have also been raised in Washington about Middle Eastern nations leveraging their relationships with both the U.S. and China.
In response to pressure from Washington, G42 has taken steps such as divesting its stake in ByteDance, the parent company of TikTok. Gina Raimondo, the U.S. commerce secretary and a key negotiator in discussions with G42, emphasized, “When it comes to emerging technology, you cannot straddle both the U.S. and China.”
This investment represents a fusion of corporate interests and U.S. strategic goals. It emerged from dialogues between U.S. officials and tech executives seeking to promote business transactions that advance American interests in critical regions and technologies. As part of the deal, Brad Smith, Microsoft’s president and chief legal officer, will join G42’s board, and Microsoft will have oversight over G42’s technology usage.
“The U.S. naturally seeks to safeguard the most critical technologies through trusted American companies,” remarked Smith. Raimondo affirmed that Washington officials are “confident that this agreement upholds our values.”
Microsoft also stands to benefit. The investment provides Microsoft with a stake in another promising AI venture as it vies for leadership in the field. (However, some of Microsoft’s recent investments are under scrutiny from Washington antitrust regulators.) Additionally, it grants Microsoft access to a broader customer base, particularly in Middle Eastern countries investing heavily in AI technology.
A long-awaited House vote on aid for Israel and Ukraine could occur this week. Speaker Mike Johnson announced plans for lawmakers to vote on three bills mirroring a $95 billion Senate package, alongside a separate measure aimed at appeasing Republican colleagues. However, the fate of the legislation remains uncertain, with hard-line Republicans opposing aid for Ukraine, while some left-wing Democrats question unrestricted aid to Israel.
China’s economy is rebounding, surpassing analysts’ expectations. The unexpected 1.6 percent growth in first-quarter GDP was bolstered by robust factory output, indicating that the country’s substantial investment in manufacturing is yielding positive results. Nonetheless, challenges persist, including uneven consumer spending, disinflation, and a slowdown in the real sector that could hinder growth in the coming months.
Shares in Trump Media continue to plummet. They dropped 18 percent on Monday and have fallen more than 60 percent since late March, erasing billions from Donald Trump’s paper wealth. The latest decline followed the company’s registration for the potential sale of millions of new shares, causing concern among investors. Meanwhile, the Supreme Court is set to hear arguments on Tuesday that could be crucial to the former president’s defense in a case related to his role in the 2021 Capitol attack.
Big-name donors are allocating their funds:
As the race for the White House tightens and control of Congress remains up for grabs, prominent donors have poured millions into key races nationwide.
Democrats started the year with a fundraising advantage. However, in the past quarter, Republican campaigns and causes have received significant donations from wealthy backers, as voters prepare for a potential rematch between President Biden and Donald Trump. Notably, a major Trump funding committee reported raising over $23 million, with support from figures like Kelly Loeffler, a Republican former senator from Georgia, and John Paulson, a billionaire investor.
According to the latest quarterly filings with the Federal Election Commission, due at midnight, here’s where some of the major donors allocated their contributions:
- Ken Griffin: $32 million. The founder of Citadel, a Republican megadonor, allocated millions to Nikki Haley’s presidential campaign. Additionally, he distributed $11.5 million to Senate and House Republicans, $10 million to Maryland’s Future, a fund expected to support former Gov. Larry Hogan’s Senate bid in Maryland, $5 million to a fund backing conservative veterans, and $2.5 million to a Midwest Republican group.
- Timothy Mellon: $19 million. An heir to the Mellon banking fortune, Mellon donated $5 million to a fund supporting Robert F. Kennedy Jr.’s independent presidential campaign, $5 million to a Trump fund this quarter, $5 million to House Republicans, and $4 million to a Heritage Foundation fund.
- Jeff Yass: $17.9 million. The billionaire investor emerged as the largest individual donor in the federal election cycle, contributing over $46 million, according to OpenSecrets. In the past quarter, he contributed $8 million to a fund associated with Senator Rand Paul, $6.9 million to school choice funds, and $3 million to a Pennsylvania-focused fund. Speculation suggests that Yass, whose Susquehanna International Group holds stakes in companies like TikTok’s parent ByteDance and Trump’s social media firm, could become a major backer of Trump.
- Isaac and Laura Perlmutter: $10 million. The former Marvel CEO, along with his wife, donated $5 million each to a new fund supporting Trump.
- Cameron and Tyler Winklevoss: $4.9 million. The twin founders of the cryptocurrency exchange Gemini contributed $2.45 million each to Fairshake, a super PAC aiming to support crypto-friendly candidates. Fairshake and its allies raised around $80 million last year and have spent funds against candidates perceived as hostile to the sector, such as Representative Katie Porter, a Democrat from California, whose Senate bid failed last month, as well as Senators Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, both Democrats who have been critical of the industry.
Up next: Donors who directly contributed to a presidential candidate (rather than through joint fundraising committees or super PACs) last quarter face a separate disclosure deadline this weekend.
“My plans include being a recess monitor for my second-grade daughter, practicing my violin, attending various bucket list sporting events, and embarking on long-intended travel with my very patient wife.” — Rohan Patel, outgoing head of policy and business development at Tesla. Patel is one of two top executives departing the electric vehicle maker as it announced roughly 14,000 layoffs on Monday, amidst a sector-wide sales slowdown that has resulted in billions being wiped off the company’s market capitalization.
A major antitrust battle may be looming over Live Nation:
After tackling large deals and tech giants, the Biden administration’s antitrust enforcers are reportedly gearing up for their next major battle: Live Nation, the parent company of Ticketmaster. The company’s dominance in concert tickets and promotion has come under renewed scrutiny following a ticketing controversy involving Taylor Swift in 2022.
If the Justice Department decides to pursue legal action, as reported by The Wall Street Journal, it would mark the culmination of years of scrutiny. Live Nation’s stock fell over 9 percent in premarket trading on Tuesday.
Live Nation has faced longstanding complaints about its practices, including high ticket prices, poor customer service, and anticompetitive behavior. Ticketmaster now controls over 70 percent of the primary ticket sales market at major U.S. venues, thanks to exclusive contracts.
While Ticketmaster has been criticized for decades, its 2010 merger with Live Nation, approved by the Justice Department during the Obama administration, raised concerns to a new level.
The latest investigation began in 2022, focusing on whether Live Nation is unlawfully monopolizing the live music industry. The ticketing mishap during Swift’s Eras Tour heightened scrutiny, leading to a Senate Judiciary Committee hearing where both Democrats and Republicans lambasted the company.
Live Nation has consistently maintained its innocence, arguing that it faces more competition in ticket sales than ever before. Last year, the company agreed to enhance fee transparency as part of the Biden administration’s campaign against “junk fees.”
Additionally, Live Nation remains bound by a legal settlement with the Justice Department stemming from the 2010 merger, prohibiting it from threatening venues with tour access revocation if they choose alternative ticketing providers.
