Microsoft said on Tuesday it would sell artificial intelligence giants in the United Arab EmiratesG42The $1.5 billion deal, orchestrated largely by the Biden administration, comes as Washington and Beijing vie for technological influence in the Persian Gulf and elsewhere.The deal is designed to exclude China.

Under the partnership, Microsoft will allow G42 to sell Microsoft services that use powerful AI chips used to train and fine-tune AI-generated models. In return, G42, which has come under scrutiny in Washington for its ties to China, will use Microsoft’s cloud services and abide by a security agreement negotiated in detail with the U.S. government. The agreement sets a series of protections for AI products shared with G42 and also includes an agreement to strip Chinese equipment from G42’s operations.

“You can’t be in China’s camp and in our camp when it comes to emerging technologies,” said U.S. Commerce Secretary Gina Raimondo, who has traveled to the UAE twice to work out security arrangements for this and other partnerships.

Microsoft President Brad Smith said in an interview that the agreement was highly unusual and reflected the U.S. government’s particular concern about protecting the intellectual property behind artificial intelligence programs.

“The United States naturally wants its most important technologies to be protected by a trusted American company,” said Smith, who will serve on the G42 board.

The investment helps the United States push back against China’s rising influence in the Gulf region. If successful, the G42 will be brought into the American camp and less connected to China. The deal could also become a model for how American companies can use their technological leadership in artificial intelligence to attract other countries to abandon Chinese technology while reaping huge economic rewards.

Raimondo has been working to prevent China from gainingState-of-the-art semiconductorsand its manufacturing equipment, she said in an interview that the agreement “does not authorize the transfer of artificial intelligence orAI models or GPUs” — the processors needed to develop AI applications — and “ensure these technologies can be developed, secured and deployed securely.”

While the UAE and the United States have not signed a separate agreement, Raimondo said: “We have been briefed extensively and we are confident that this agreement is consistent with our values.”

“Through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge AI technologies at scale,” G42 Group CEO Xiao Peng said in a statement.

But U.S. officials also worry that without adequate safeguards, the spread of powerful AI technology critical to national security could end up being used by China or engineers with ties to the Chinese government. Last month, a U.S. cybersecurity review board sharply criticized Microsoft Corp. after hackers from China gained access to data on senior officials in an attack. Any major leaks — such as G42 selling Microsoft AI solutions to Chinese companies in the region — would run counter to the Biden administration’s policy of trying to limit China’s access to cutting-edge technology.

“This is one of the most advanced technologies the United States has,” said Gregory Allen, a fellow at the Center for Strategic and International Studies and a former U.S. Department of Defense official. “There would have to be a very strategic reason to move it anywhere overseas.”

For Microsoft, the deal with G42 offers potential access to the vast wealth of the United Arab Emirates. The company, whose chairman is Sheikh Tanoun bin Zayed, the national security adviser and brother of the UAE ruler, is at the heart of the country’s efforts to become a major artificial intelligence player.

The company’s name is inspired by The Hitchhiker’s Guide to the Galaxy, in which the answer to “life’s ultimate question” is 42. Despite its funny name, G42 is a company deeply embedded in the UAE’s national security system. It specializes in artificial intelligence and has recently been working on developing an Arabic chatbot called Jais.

G42 also specializes in biotechnology and surveillance. Several of its executives, including Xiao Peng, have worked with Dark Matter, a UAE-based cyber intelligence and hacking firm that employs former spies.

The bipartisan House of Representatives Commission on U.S.-China Strategic Competition said in a letter this year that Xiao Peng had ties to a vast network of companies that provided “substantial support” to the Chinese military’s technological advancement.

Tuesday’s agreement stems from a series of meetings at the White House last year, when top national security aides posed a question to tech executives about how to encourage commercial arrangements that deepen U.S. ties with companies around the world, particularly those that China also holds interest in.

Under the agreement, G42 will stop using Huawei’s telecommunications equipment, which the United States fears could provide backdoors for Chinese intelligence agencies. The agreement further commits G42 to seeking permission before sharing its technology with other governments or militaries and prohibits using the technology for surveillance. Microsoft will also have the right to audit G42’s use of its technology.

G42 will gain access to Microsoft’s AI computing power in its UAE data centers, a sensitive technology that cannot be sold in the UAE without an export license. The second phase of the deal, which is potentially more controversial and has not yet been negotiated, could transfer some of Microsoft’s AI technology to G42.

In recent months, G42 has agreed to divest some of its ties with China, including divesting its stake in TikTok owner ByteDance and removing Huawei technology from its operations, according to U.S. officials.