Deal in the desert

MICROSOFT HAS AGREED to invest $1.5 billion into G42, an artificial intelligence giant headquartered in the United Arab Emirates, in a deal that could help curb China’s global influence. The deal, announced April 16 and heavily negotiated by the U.S. government, will give G42 permission to use Microsoft’s ­processing chips to train and fine-tune AI models. G42 will begin using Microsoft’s cloud services, give Microsoft’s president a seat on its board, and stop using telecom technology from Chinese company Huawei.

In January, U.S. House lawmakers urged the Commerce Department to consider sanctioning G42, claiming its group chief executive, Peng Xiao, is connected to companies that “materially support” the technological advancement of China’s military.

The U.S. government hopes the new Microsoft deal will forestall China’s influence in the Emirates. U.S. Commerce Secretary Gina Raimondo, who flew to the Emirates twice to help hammer out the agreement, told The New York Times it contains safeguards to prevent sensitive technology from being sold to any China-linked companies. “When it comes to emerging technology, you cannot be both in China’s camp and our camp,” she said.

TikTok troubles

TikTok suspended a key feature of its TikTok Lite app in the European Union April 24 under pressure from the European Commission. Commissioner Thierry Breton said a feature of the app that pays users ages 18 and up for watching videos is “toxic and addictive” and could pose a danger to children. The app also drew the commission’s ire for failure to submit a risk assessment required by the Digital Services Act, which took effect last year.

TikTok Lite, a slimmed-down version of the standard TikTok app meant for countries with slower data speeds, first launched in 2018 but expanded to EU ­members France and Spain for the first time in mid-April. TikTok had until May 3 to provide further documents and argue its case or risk fines of up to 1 percent of its annual income. —E.R.

Too big not to tax?

Canada appears poised to tax tech giants like Alphabet and Meta 3 percent of their digital services revenue. If passed by Parliament, the measure will require large companies to pay the tax on Canada-based annual revenues in excess of $14.5 million per year. Since the rule would affect mainly American companies, U.S. lawmakers have urged the Biden administration to institute retaliatory trade measures against Canada if the tax is adopted. —E.R.