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Microsoft’s UAE deal could transfer key US chips, AI technology abroad

Microsoft’s UAE deal could transfer key US chips, AI technology abroad

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Microsoft's UAE deal could transfer key US chips, AI technology abroad

Microsoft President Brad Smith said the tech company’s high profile deal with the United Arab Emirates-backed AI firm G42 could eventually involve the transfer of sophisticated chips and tools – a move that a senior Republican congressman warned could have national security implications.

In an interview with Reuters this week, Smith said the sales accord, many details of which are being reported here for the first time, could progress to a second phase that entails the export of crucial components of AI technology such as model weights, a crown jewel of AI systems that determine how powerful they are. Smith said there is no firm timeline for the second phase.

US officials have said that AI systems could pose national security risks, for example by making it easier to engineer chemical, biological and nuclear weapons. The Biden administration in October required the makers of the largest AI systems to share details about them with the US government.

To move forward, the deal would require the approval of the US Department of Commerce. Microsoft executives said the agreement has safeguards to protect Microsoft’s technology and prevent it from being used by Chinese entities to train AI systems.

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But those measures have not been made public, and some US lawmakers question whether they are adequate.

The closed-door nature of the negotiations between two private companies over the terms and safeguards on transfers of US technology have alarmed some lawmakers.

“Despite the significant national security implications, Congress still has not received a comprehensive briefing from the executive branch about this agreement,” Michael McCaul, the Republican chairman of the foreign affairs committee in the US House of Representatives, told Reuters.

Read more: Economic diversification: UAE and US to see more AI partnerships

“I am concerned the right guardrails are not in place to protect sensitive US-origin technology from Chinese espionage given the (Chinese Communist Party’s) interests in the UAE.”

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The Commerce Department already requires notifications and, in several regions, export licences to send AI chips abroad. But the Microsoft-G42 deal highlights gaps in US laws as regulators rush to keep up with fast-moving technology.

At present, for example, there is no regulation restricting the export of AI models, though McCaul and a bipartisan group of lawmakers this week advanced legislation that would give US officials more explicit power to do so.

Microsoft executives said the company welcomes a debate on a new legal framework governing the transfer of AI technology and that the deal with G42 requires the UAE firm to comply with US regulations as they evolve.

“Fundamentally, what we’re focused on is trying to ensure that American technology can move around the world safely and securely,” Smith said.

BEYOND UAE

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When Microsoft and G42 announced the deal last month, it was billed as drawing G42 closer to the US and spreading US technology influence amid strategic competition with China. Microsoft is investing $1.5 billion in G42 with Microsoft’s president, Smith, taking a seat on its board.

The companies did not give details about which technologies might be transferred to the UAE or other countries or which specific security safeguards would be put in place. Some of those details are being reported here for the first time.

The broad intent of the deal is for Microsoft and G42 to jointly take AI technology into regions where neither could do so as effectively alone. An early example is a deal in Kenya announced by the two companies on Wednesday.

Read more: US lawmakers advance bill to make it easier to curb exports of AI models

The Microsoft-G42 deal is an agreement between the two companies that requires each to give security assurances to their respective home governments, but there is no direct agreement between the US and UAE governing the transfer of sensitive technologies. The two companies could seek to transfer those technologies to other markets beyond the UAE, including places like Turkey and Egypt, Microsoft executives said.

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Smith said many of the details of the deal remain to be worked out, including how to protect what are known as AI “model weights,” which is the critical part of an AI model that defines how it responds to questions or prompts. Those weights are obtained by training an AI model with huge amounts of data, often at great expense.

Model weights currently cannot be encrypted while in use, and Smith estimated the promising technical approaches for doing so remain at least a year away.

Smith said Microsoft has considered several alternative options to protect its technology, including a “vault within a vault” that would involve physically separating parts of data centers where AI chips and model weights are housed and restricting physical access.

“I suspect by the time we’re done, we’re going to end up with a regulatory regime or trade export control approach that will be applicable broadly and not just to Microsoft and G42,” Smith said.

Under the Microsoft deal, G42 will also follow a “know your customer” rule to determine who is using Microsoft’s technology and will not allow Chinese firms to use it to train AI models, Microsoft executives said. US regulators have proposed a similar rule, but they have not yet enacted it.

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“We adopted a strategic commercial decision to partner with US companies when it comes to advanced technologies. And we’re very clear on the fact that in order to do so, we will need to adhere to the requirements and our partners and government regulatory requirements or export control regulations,” Talal Al Kaissi, an executive who handles partnerships for G42’s AI work, told Reuters.

Under the deal, Microsoft would have the ability to impose financial penalties on G42 and enforce them in arbitration courts in London, Microsoft said. That means Microsoft would not be forced to work through the UAE legal system to ensure G42 complies with its obligations and could seize assets in many countries if G42 is found in violation of the agreement, Microsoft said.

Precisely how US Commerce Secretary Gina Raimondo will allow the deal to move forward remains unclear. Smith said the provisions are “informal” and that “certainly with this Secretary of Commerce, one knows pretty clearly whether she approves or rejects something.”

In a statement, a Commerce Department spokesperson said any technology transfers would be governed by export controls, “including currently in force licensing requirements” for AI chips and “potential future controls.”

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Budget 2024-25: Sindh announces up to 30pc increase in salaries

Budget 2024-25: Sindh announces up to 30pc increase in salaries

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Budget 2024-25: Sindh announces up to 30pc increase in salaries

The Sindh government has proposed up to 30 percent increase in salaries of its employees in the budget for next fiscal year 2024-25. 

Chief Minister Murad Ali Shah, who also holds the portfolio of finance minister, presented the budget in the provincial assembly on Friday. 

He said the government had proposed 30pc increase in salaries of officials from Grade 1 to 6, adding that there was 25pc increase for officials of Grade 7 to 16. Similarly, officers from Grade 17 to 22 would get 22pc hike in their salaries. 

Furthermore, the provincial government has propsed 15pc increase in pension of the retired employees. 

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Presenting the budget with a total outlay of Rs3,352 billion, he said, the government had decided to allocate Rs959 billion for development projects.

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Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

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Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

The Sindh government has revised the minimum wage for unskilled labourers to Rs37,000 in line with decisions of the federal and Punjab governments. 

The minimum salary has been increased by Rs5,000 as previously it stood at Rs32,000. The proposal was laid forth by Chief Minister Murad Ali Shah while presenting the budget for the fiscal year 2024-25. 

Meanwhile, the Sindh government has proposed up to 30 percent increase in salaries of its employees in the budget for next fiscal year 2024-25. 

The chief minister said the government had proposed 30pc increase in salaries of officials from Grade 1 to 6, adding that there was 25pc increase for officials of Grade 7 to 16. Similarly, officers from Grade 17 to 22 would get 22pc hike in their salaries. 

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Furthermore, the provincial government has propsed 15pc increase in pension of the retired employees.

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Budget 2024-25: Let’s figure out the cost of essentials

Budget 2024-25: Let’s figure out the cost of essentials

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Budget 2024-25: Let's figure out the cost of essentials

The federal government has announced a staggering Public Sector Development Programme (PSDP) worth Rs1,500 billion. 

According to the budget document, all federal divisions have been allocated budget, except the Poverty Alleviation and Special Safety Division, which deals directly with matters concerning 95 million people who are living in abject poverty. 

Sadly, the Poverty Alleviation and Special Safety Division gets nothing in the PSDP 2024-25. 

Worse still, the Ministry of Poverty Alleviation and Social Safety does not have any minister as its head, rendering it almost moribund for more than 10 months. Earlier, Dr Sania Nishtar was chairing it during the PTI government, followed by Shazia Marri during the PDM government. 

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Last year, 12.5 million people slipped into poverty, which took it from 34.2pc to 39.4pc, according to the World Bank. 

The government has conveniently ignored the poor in the budget. Other than announcing Rs598.71billion under the Benazir Income Support Programme (BISP), no substantial amount has been earmarked for reducing poverty. 

Your next read: BUDGET 2024-25 – A LAYMAN’S GUIDE 

Analysts believe that 27 percent increase in BISP from Rs471.3 billion to Rs598.71 billion has been made to placate the Pakistan Peoples Party, which may take the wind out of PML-N’s sails anytime. 

BURGEONING TAXES 

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On the other hand, if we delve into the details of burgeoning taxes, Sales Tax stands out in afflicting the poor the most. 

Now a sales tax of 10pc will be charged on stationery items. 

Tribal area residents who have been experiencing extreme poverty will now have to pay 6pc tax on the supply and import of plant machinery as well as electricity on both residential and commercial connections. 

Following the similar trajectory, a 10pc sales tax will be charged on the local supply of vermicelli, buns, poultry feed, cattle feed, sunflower seed meal, newsprint, books, oil cakes and tractors. 

On mobile phones whose value is less than $500 (Rs139,240), 18pc tax has been imposed. If the value of purchased phone exceeds $500, an existing rate of 25pc will remain unchanged. 

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Earlier, the retailers of leather and textile products who paid 15pc sales tax will now have to pay 18pc tax. 

Drug prices will increase massively as the sales tax on raw materials used in production of pharmaceutical items has been raised to 18pc from 1pc. This will be applicable on medical treatment, diagnostic equipment, heart surgery, neurosurgery, electrophysiology, endoscopy, endosurgery, oncology, urology, gynaecology, disposables and other medical equipment.

Besides, 20pc sales tax on import of syringes, needles, catheters, cannulae, blood collection tube of glass and blood collection tube of PET.

Moreover, charitable hospitals with 50 or more beds will pay 18pc sales tax on imported medical goods. 

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