U.S. Secretary of State Rubio and UAE National Security Advisor Sheikh Tahnoon [AP=Yonhap News File Photo]

The U.S. Central Intelligence Agency (CIA) secretly investigated allegations of ties between the United Arab Emirates (UAE) AI firm G42 and China, while simultaneously providing advice to help resolve those concerns, ultimately supporting the UAE's acquisition of advanced U.S. AI semiconductors, the Wall Street Journal (WSJ) reported on the 19th (local time).

According to the report, in 2023, the CIA dispatched veteran operative Johnny Gannon to Abu Dhabi, the capital of the UAE, to conduct an intensive investigation into the relationship between China and G42, an AI firm effectively owned by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE's National Security Advisor and brother of the president.

At the time, the U.S. government was concerned that G42's close ties with China could lead to the leakage of U.S. technology if AI semiconductor exports were approved.

The background of G42 CEO Peng Xiao, who was born in China and attended college in Hawaii, further fueled these suspicions.

In 2015, Xiao led the AI division of DarkMatter, a cybersecurity firm based in Abu Dhabi. U.S. prosecutors determined that DarkMatter had employed former U.S. National Security Agency (NSA) hackers to surveil the UAE's political rivals, activists, and journalists.

Xiao's department had a significant number of Chinese employees, opened branch offices in China, and signed an agreement with the Chinese telecommunications equipment manufacturer Huawei to develop AI technology for urban surveillance. DarkMatter was effectively dismantled following an FBI investigation in 2019, after which Xiao and his division were separated, leading to the creation of the current G42.

Gannon, operating under the cover of a staff member at the U.S. Embassy in the UAE, monitored G42 while simultaneously communicating U.S. government concerns to G42 and UAE officials, pressuring them to sever ties with China.

As a result, G42 announced that it had scaled back its technological cooperation with China, including the removal of $150 million worth of Huawei equipment, and accepted a U.S. demand to appoint an external auditor to verify its regulatory compliance.

However, some in the U.S. government remained skeptical, questioning whether G42 was merely pretending to cut ties with China.

Some officials even requested that Gannon investigate indications of continued contact between G42 and Chinese state-owned enterprises. Gannon reported that such contacts were likely the independent activities of lower-level employees rather than instructions from Xiao, and that they could not be viewed as evidence of Xiao breaking his promises to the U.S.

Within the U.S. administration, opinions remained divided between those who argued that cooperating with G42 would bring the UAE into the U.S. camp and expand business opportunities for American companies, and those who feared that transferring advanced AI technology to a UAE close to China could undermine U.S. strategic superiority.

Nvidia CEO Jensen Huang [Reuters=Yonhap News File Photo]

This divide within the administration was reportedly starkly evident during a June 2024 meeting at Tahnoon's residence in McLean, Virginia, which was attended by Tahnoon, Xiao, Gannon, and U.S. administration officials.

At the meeting, Xiao reportedly mentioned the AI technology being developed by the Chinese firm DeepSeek, arguing that without G42's cooperation, Chinese AI would soon threaten U.S. dominance in the field.

Seven months later, in January of last year, DeepSeek's AI model was unveiled, and one week before President Joe Biden left office, the U.S. government established an institutional framework allowing the UAE to receive Nvidia AI chips on a conditional basis.

The WSJ noted that this served as an opportunity for the UAE to side with the U.S. by excluding Chinese technology.

Following the inauguration of the Donald Trump administration, the UAE's access to U.S. AI semiconductors has expanded even further.

In May of last year, an agreement was signed involving U.S. tech companies like OpenAI and Nvidia in the construction of G42's AI data center, related to the "Stargate UAE" project—the world's largest AI data center construction effort.

Subsequently, the U.S. Department of Commerce announced on the 10th a significant relaxation of AI semiconductor export controls for the UAE. As a result, G42 will be able to freely purchase semiconductors from U.S. companies such as Nvidia for at least the next nine months.

While concerns about conflicts of interest were raised by some after Tahnoon's side promised to invest $500 million in World Liberty Financial, a virtual asset company founded by the Trump family just before President Trump's inauguration last January, the White House has denied these allegations.

Amidst the intensifying competition for AI technological supremacy between the U.S. and China, the CIA's activities targeting G42 and the subsequent decision-making process by the U.S. government are viewed as an example of a new form of tech hegemony competition, blending intelligence, diplomacy, and industrial policy.

The WSJ stated, "A new diplomatic gray zone is forming, where espionage, diplomacy, and commercial lobbying are blended over the future of the technological hegemony race."