Musk Demands xAI Inclusion in UAE AI Project Amid OpenAI Rivalry

Elon Musk has reportedly intervened in a major AI project in the Middle East, demanding that his company, xAI, be included in the deal. This move comes as a response to OpenAI's plans to build a data center in the region, which Musk sees as a direct threat to his own AI ambitions.

On May 28, it was reported that during a phone call with officials from G42, an AI company controlled by the brother of the UAE president, Musk made it clear that the project would not proceed without the inclusion of xAI. This threat was issued after Musk learned that OpenAI's CEO, Sam Altman, was accompanying the Donald Trump on a trip to the Gulf region and was in the process of finalizing a deal with the UAE.

Musk's intervention is not the first time he has clashed with Altman. The two co-founded OpenAI in 2015, but Musk left the company in 2018 due to a power struggle. Since then, Musk has publicly criticized Altman, accusing him of betraying OpenAI's non-profit mission and even dubbing him "scammy Sam" and "fraud Altman." In response to OpenAI's popular product, ChatGPT, Musk launched his own competitor, xAI. However, xAI has not yet achieved the same level of attention and commercial success as ChatGPT, which may be a driving factor behind Musk's aggressive tactics.

Despite Musk's demands, the UAE has not entirely ignored his interests. Tahnoon's MGX fund was a major investor in xAI's 600 million dollar funding round in December, and Dubai also agreed in February to build an 11-mile tunnel network with Musk's Boring Company. The UAE's AI ambitions are part of a broader economic diversification strategy, aiming to reduce its reliance on oil and position itself as a global leader in AI.

The UAE's strategy involves a comprehensive approach, including promising significant investments in the U.S., lobbying influential CEOs, and even supporting Trump's family businesses. The goal is to secure changes in chip export rules, which have been restricted by the Biden administration. The UAE has prepared a site for an AI data center cluster with a capacity of 5,000 megawatts, a project far larger than any single site in the U.S.

The final deal, announced on May 22, was delayed by a week from the originally planned date. The "UAE Star Gate" agreement requires G42 to cover the construction costs and commit to similar-scale projects in the U.S. Notably, under the U.S.-UAE framework agreement, xAI has been conditionally approved to purchase up to 500,000 chips annually, indicating that Musk's intervention has at least partially succeeded.

Musk's aggressive tactics and the UAE's strategic maneuvering highlight the intense competition and political maneuvering in the AI industry. The inclusion of xAI in the deal, despite initial resistance, underscores the significance of Musk's influence and the UAE's willingness to accommodate powerful stakeholders in pursuit of its AI ambitions. The outcome of this high-stakes game will likely have far-reaching implications for the future of AI development and geopolitical dynamics in the region.