Will G42 become a US company?

G42 finds itself in an unprecedented position as it preps one of the largest computing infrastructure builds in human history. The sovereign-backed UAE national AI champion has loads of capital, an investor list that includes Microsoft and US private equity giant Silver Lake, and license-free access to the most advanced AI chips.

But it also has a Sword of Damocles hanging over it — a Trump administration threat that it may rein in that chip access if G42 doesn’t become a US company.

Hunh?: The potential requirement — squeezed into a 17-word clause about halfway through the roughly 5k-word Commerce Department rule granting license-free access to top-end AI chips for G42, its cloud division Core42, and for eight US companies operating in the UAE — has befuddled US export-control experts. They say they’ve never encountered such language before, have no idea whether to take it seriously, and don’t understand how it fits into the national security framework that’s supposed to guide export control decisions.

They also have no idea how G42 and Core42 could satisfy the requirement. Does becoming a US company just mean incorporating in a US state? Or would it require something more significant, such as selling a majority interest to a US company? (G42 has held exploratory talks about such a deal, Bloomberg reported in September, though it didn’t name any US companies in the mix. The company already includes Microsoft among its investors.) Or could there be some sort of middle ground, such as firewalling off particularly sensitive parts of the company under US control with a separate board of directors?

“It is really, really strange,” Sarah Bauerle Danzman LinkedIn, an Indiana University professor and nonresident senior fellow at the Atlantic Council think tank, whose research focuses on exports and investments, tells EnterpriseAM. “I don’t understand the legal framework on which it rests.”

Here’s what G42 tells us in a statement: “We already maintain substantial ties to the United States through our partnerships, US shareholders and US based entities, and we continuously assess opportunities that support our long-term objectives. We will continue to operate in full compliance with all applicable requirements. We have no further comment on specific regulatory or corporate considerations at this stage.” The Commerce Department division that oversees US export controls did not respond to a request for comment.

If the Trump administration decides to insist on G42 and Core42 becoming US companies, that would pose a profound question for Emirati leaders: Is it more important to retain control over G42 as a technological crown jewel, demonstrating the Gulf’s power and influence? Or to ensure high-end chip access — even at the cost of G42 becoming an American company?

Don’t underestimate the reputational stakes: Forfeiting G42’s identity as a UAE company would mark a significant blow to the proposition that a Gulf-based player — sitting outside the two AI superpowers of the US and China — could nevertheless be a major actor on the frontier of this new technology.

The ownership question also highlights a conundrum at the center of the UAE’s AI commitments. Is AI an important, but ultimately not-transformational technology? If so, the UAE can risk retaining full control of G42 and build a perfectly good compute-selling business without guaranteed access to absolutely-top-of-the-line chips. Or is it a technology so revolutionary that it’s worth any price — including releasing some control over the national AI champion — to be at the absolute bleeding edge?

AND- Don’t forget that this is all happening within the context of an immensely complex US-UAE bilateral relationship, which includes a USD 1.4 tn US investment pledge, US security commitments, and the future of US military bases, which have become increasingly important since the launch of the Iran war.

“The UAE has a lot of dependency on the United States, and maybe [on] American companies also,” Hdeel Abdelhady LinkedIn, a Washington, DC-based attorney with MassPoint PLLC focused on export controls and emerging technology, tells EnterpriseAM. “We don’t know what all of the considerations are, what are all the aspects of these various deals, and what are all the linkages,” she adds.

The fine print: The US Commerce Department’s July rule moved the UAE off of lists of countries flagged for chemical-weapons and missile-proliferation concerns and onto another list, Country Group A:5. That list includes Washington’s closest export-control partners, which qualify for the most generous exemptions from US export-licensing requirements.

The finer print: The rule carved out an exception for top-shelf AI chips — US exporters still need licences to ship them to anyone in the UAE except G42, Core42, and other approved entities. The rule also says that G42 and Core42’s status will expire in April 2027 unless they become US companies or win renewed approval from the Commerce Department. The rule specifically called out the UAE’s cooperation during the ongoing US war against Iran.

The whole stack: G42 is essentially a holding company comprised of numerous portfolio companies focused on different components of the AI workload. In addition to Core42, there’s Khazna, the company’s data center builder, Presight, focused on big data analytics, Inception, focused on AI models and products, and divisions focused on medicine, satellites, energy, consumer fintech and security. The Commerce Department rule names only G42 and Core42 and doesn’t address the rest of this structure or say what would happen to any of these divisions if G42 becomes a US company.

So, what’s going on? In the absence of clear answers, experts are left to speculate about the Trump administration’s motives. Here are some of the most plausible explanations:

• Keeping options open: Maybe the administration wants to reward the UAE for helping out during the Iran War, but also to retain the option to back out if problems arise, such as AI secrets leaking from the UAE to China.
• Maintaining leverage: Perhaps Trump wants to maintain leverage over the UAE — for example, to push the oil-rich nation to make more business deals in exchange for future license extensions.
• Extending US power: The dealmaker-in-chief could genuinely be interested in the US taking a substantial ownership stake in a company that looks like it could be a big AI player in a significant part of the world. (Trump has previously engineered the US government taking a stake in private companies, including chipmaker Intel and a “golden share” in US Steel as a condition of its sale to Japan’s Nippon Steel. The government now holds stakes in about 40 companies, according to a tally by Tad DeHaven, a policy analyst at the libertarian Cato Institute.)
• Self-enrichment: Or, more nefariously, does Trump see potential to extract economic gain for himself or members of his family? (Democratic lawmakers have argued the initial UAE chip deal may have been a quid pro quo for a USD 500 mn investment in World Liberty Financial, a Trump family cryptocurrency venture, by the UAE firm Aryam Investment reportedly backed by UAE National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan. Sheikh Tahnoon, a member of the UAE royal family, is also chairman of the boards of both G42 and MGX, a sovereign-backed investment fund that focuses extensively on AI.)

The bottom line: “The problem is that, in the hands of an executive that wants to use its executive power quite broadly and for a variety of purposes, it can be used in ways that are really not about the purpose of the [Commerce Department] rule itself, but instead to enrich insiders [or] to exert substantial leverage over these companies,” Indiana University’s Bauerle Danzman says.

There could also be some business drawbacks for a US-controlled G42. Most prominently, one of G42’s big pitches to customers has been “sovereign AI,” the notion that governments and critical industry sectors in the Middle East and Africa can run AI workloads using G42 computing power and retain the same legal and political control over it that they would if they controlled the whole technology stack.

That argument would be a lot harder to make if G42 were an American company subject to American laws — which specifically require that US law enforcement with a warrant can access US companies’ data wherever it exists in the world. “It would fatally compromise the core pitch of [their] new niche product, sovereign AI data centers, which is ‘we are not subject to US laws,’” Andrew Leber LinkedIn, a Tulane University political science professor focused on the MENA region and a non-resident scholar at the Carnegie Endowment for International Peace think tank, tells EnterpriseAM.

Facts on the ground: The UAE also has some leverage of its own if the Trump administration is pushing a version of US ownership that it doesn’t want to accept. G42 investors Microsoft and Silver Lake both have a lot of influence in Washington and a stake in seeing the company’s chip access continue. Plus, the UAE is also a big investor in US AI labs — including Anthropic, OpenAI, and xAI — at a time when AI is largely responsible for keeping the US stock market afloat. Those facts would give the Trump administration a big incentive to keep the top-end chips flowing.

Up next: Those facts could also give the next administration — whether Democratic or Republican — incentive to look for ways to deal with any concerns about the UAE’s AI operations without restricting its chip access.

One option may be demanding US oversight over G42 data security operations to ensure data isn’t leaking to China, Bauerle Danzman says. “I think it will be hard to put the toothpaste back in the tube, especially if there are a lot of US companies that are relying on these particular data centers and compute power,” she says.