$Microsoft (MSFT.US)$ $1.5 billion investment in UAE-based AI firm G42 has drawn criticism from Republican lawmakers over the company's historical ties to China.
What Happened: Rep. Michael McCaul (R-Texas), chair of the House Foreign Affairs Committee, and Rep. John Moolenaar (R-Mich.), leader of the Select Committee on China, have called for an intelligence assessment of the deal from the Joe Biden administration, reported Reuters.
In a letter dated Wednesday, Republicans have requested a briefing before the deal enters its second phase, which involves the transfer of export-restricted semiconductor chips and model weights.
"We remain deeply concerned by attempts to move quickly to advance a partnership that involves the unprecedented transfer of highly sensitive, U.S.-origin technology, without congressional consultation or clearly defined regulations in place," the lawmakers said in the letter.
They have also asked for a U.S. assessment of G42's ties to China's Communist Party, military, and government before the Microsoft deal advances further.
Microsoft has responded by stating that it is working closely with the U.S. government and that "U.S. national security will continue to be a principal priority."
The Chinese Embassy said, "The U.S. has repeatedly undermined cooperation between Chinese companies and other countries on trumped-up security grounds."
Why It Matters: The U.S. has been increasingly concerned about China's influence in the Middle East and the United Arab Emirates. G42 announced in February that it had divested its investments in China and agreed to the restrictions imposed by the U.S. to collaborate with the country's companies.
This development comes in the wake of Microsoft's recent moves in China. Earlier in May, the tech giant urged its China-based AI team to relocate amid escalating tech tensions between Beijing and Washington.
This month, Microsoft has also reportedly asked its staff in China to switch from Android phones to iPhones at work, as part of its global Secure Future Initiative.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.