Republican chairman of the US Foreign Affairs Committee, Michael McCaul has warned of national security consequences after Microsoft’s President Brad Smith announced that the company’s high-profile setup with the United Arab Emirates (UAE)-backed AI firm G42 may include the transfer of sophisticated processors and tools.
Smith told Reuters that the pact might enter a second phase, which would involve the export of critical AI technology components such as model weights. However, no firm deadlines have been established. Officials in the United States have expressed worry that AI systems may pose national security dangers by enabling the development of chemical, biological, and nuclear weapons. The Biden administration demanded in October that significant AI system developers exchange information with the US government.
The deal’s progress is contingent on approval by the US Department of Commerce. Microsoft executives stated that the arrangement included controls to prevent Chinese companies from using Microsoft’s technology to train AI systems, albeit these steps are still unknown. Some lawmakers in the United States question their sufficiency.
According to Reuters, McCaul, expressed his worries, saying, “Despite the substantial national security consequences, Congress has yet to receive a complete briefing from the executive branch on this arrangement.”
He questioned whether sufficient safeguards are in place to protect vital US technology from Chinese espionage, given the CCP’s interests in the UAE.
Current US regulations demand notices and export licenses for AI chip exports, but the Microsoft-G42 agreement highlights regulatory loopholes as technology advances quickly. Currently, no regulations limit the export of AI models. A bipartisan group of legislators, including McCaul, introduced legislation to provide US officials express authority to control such shipments. Microsoft supports a discussion about a new legal framework for AI technology transfer, stressing compliance with growing US regulations.
“Fundamentally, we aim to ensure that American technology can move around the world safely and securely,” said Smith.
The Microsoft-G42 transaction, announced last month, was billed as increasing the United States’ technology dominance in the face of strategic rivalry from China. Microsoft is investing $1.5 billion in G42, and Smith will join its board.
Details on the exact technologies to be transferred and the security precautions are few, however several are reported here for the first time. The arrangement aims for Microsoft and G42 to collaborate to promote AI technology in areas where neither could do so effectively alone, with a recent contract in Kenya exemplifying this concept.
While the deal requires both businesses to convince their home governments of security procedures, there is no direct agreement between the United States and the UAE overseeing sensitive technology transfers. According to Microsoft executives, the firms may consider expanding these technologies to other areas, such as Turkey and Egypt.
Smith stated that aspects such as protecting AI “model weights,” which are critical for AI model performance, are still being finalised. Current approaches for encrypting these weights in usage are at least a year distant. Microsoft is looking into many security measures, including a “vault within a vault” concept that would physically separate data centre components.
“I suspect by the time we’re done; we’re going to end up with a regulatory regime or trade export control approach that will be broadly applicable, not just to Microsoft and G42,” Smith stated.
According to the agreement, G42 must follow a “know your customer” policy to prevent Chinese enterprises from utilising Microsoft technology to train AI models. US officials have suggested but not yet implemented a comparable rule.
Talal Al Kaissi, who leads G42’s AI collaborations, pointed out, “We made a strategic commercial decision to collaborate with US companies on sophisticated technology. We’re clear about meeting regulatory obligations.”
Microsoft retains the ability to impose financial penalties on G42, which are enforceable in London arbitration courts, avoiding problems with the UAE legal system and allowing asset confiscation if G42 breaks the agreement.
It is unclear how US Commerce Secretary Gina Raimondo will approach the deal. Smith defined the conditions as “informal,” citing Raimondo’s clear approval or rejection of suggestions.
A Commerce Department spokeswoman stated that any technological transfers would be subject to current export controls as well as potential future laws.
(With inputs from Reuters)
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