Report: Abu Dhabi-based AI tech firm G42 cuts ties with China as it seeks greater presence in the U.S.
By Ava Grace // Feb 23, 2024

Tech firm G42 is shifting its focus from China to America and other Western markets following concerns raised by U.S. lawmakers about its association with the Chinese Communist Party (CCP).

"All of our China investments that were previously made are already divested. Because of that, of course, we have no need anymore for any physical China presence," Xiao Peng, the chief executive officer of G42, said in an interview with Bloomberg.

G42 is an Abu Dhabi-based company focusing on artificial intelligence (AI), cloud computing and other cutting-edge technologies. It is chaired by Sheikh Tahnoon bin Zayed, the national security adviser of the U.A.E. and an influential member of the Al Nahyan royal family. (Related: U.S., Canadian AI companies COLLABORATE with Chinese experts to shape international AI policy).

The company's move comes amid increasing scrutiny over its ties to Chinese business. The House Select Committee on the CCP has asked the Commerce Department to consider imposing sanctions on G42 and its subsidiaries, saying that the group "works extensively" with the Chinese regime's military, intelligence services and state-owned entities.

G42 has sold its stakes in Chinese companies, including TikTok owner ByteDance, as the group seeks to reassure U.S. partners by cutting ties with China.

42XFund, the $10 billion technology investment arm of G42, said it had "divested from all its investments in China." The Fund did not comment on individual deals or respond to questions about the overall size of its investment in China.

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However, two people with knowledge of the matter said the sell-off included shares in Beijing-based ByteDance. G42's stake in the TikTok owner was worth an estimated $100 million, according to data provider PitchBook.

Any investment in China funds CCP's human rights abuses, says Rep. Gallagher

Rep. Mike Gallagher (R-Wis.), chairman of the House Select Committee on the CCP, applauded G42's decision to reduce its investment exposure to Chinese entities.

"There is no such thing as a private company in China, and any investment in China, particularly in blacklisted entities, only funds and facilitates the Chinese Communist Party's human rights abuses, military build-up and techno-totalitarian surveillance state," Gallagher said in a statement.

The Abu Dhabi firm, which has been at the forefront of the U.A.E. push into AI, has businesses spanning everything from cloud computing to driverless cars and is part of U.A.E. National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan's $1.5 trillion empire.

Its partnerships include one with OpenAI, the creator of ChatGPT, which is teaming up with the Gulf firm as part of an expansion within the U.A.E. and the broader region. OpenAI has held discussions with G42 to raise funding for a new chip venture.

"We do work with OpenAI closely as we’ve publicly announced, they are a key partner to us," Xiao said, declining to offer specifics. "We do a lot of very good work with Sam (Altman) because he is clearly both an intellectual leader in this domain on the frontier model development as well as a very commercially successful entrepreneur."

The company has built commercial relationships with U.S. tech giants such as Microsoft, Dell and OpenAI. But G42 also developed ties with Chinese companies, including those sanctioned by the U.S. government, raising concerns among American officials.

However, the House Select Committee on the CCP has found that Xiao "operates and is affiliated with an expansive network" of Emirati and Chinese companies that "develop dual-use technologies" and "materially support" the Chinese military's advancement as well as human rights abuses.

G42's ties to China include its partnerships with Huawei, a Chinese telecom giant with deep ties to the People's Liberation Army. Since 2019, Huawei has been heavily targeted by U.S. government trade restrictions. Still, Gallagher pointed out that the "export controls against Huawei will be further undermined if Huawei can access and/or acquire advanced AI hardware and cloud computing services through its partners like G42."

Gallagher also raised concerns over G42's connection with BGI, China's biggest genomics company formerly known as Beijing Genomics Institute, which was added to the Pentagon's blacklist of entities deemed to be connected to the CCP's military wing in 2021.

A prenatal test developed by BGI in collaboration with the Chinese military was reportedly used to harvest genetic data of women in more than 50 countries, including the United States. In March 2023, the Commerce Department imposed export restrictions on two units of BGI, saying their collection and analysis of genetic data "poses a significant risk" to contribute to the CCP's surveillance.

"Without new restrictions against G42, the company's extensive AI capabilities will provide much-needed analytical capacity for BGI to exploit the data it has collected from American citizens, to include millions of pregnant women," Gallagher said.

The New York Times also reported last November that U.S. intelligence officials feared G42 "could be a conduit by which advanced American technology is siphoned to Chinese companies or the government."

G42 categorically denied the allegations in a Jan. 11 statement released on its website. "G42 has established a worldwide network of partnerships over time, including some Chinese companies. Such engagements are standard practice among global technology companies," it said.

Xiao also told the Financial Times in December 2023 that the company was phasing out Chinese hardware provided by Huawei, including processors and data centers. "For better or worse, as a commercial company, we are in a position where we have to make a choice," Xiao told the publication at the time. "We cannot work with both sides. We can't."

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