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Microsoft Makes High-Stakes Play in Tech Cold War With Emirati A.I. Deal

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Microsoft on Tuesday plans to announce a $1.5 billion investment in G42, an artificial intelligence giant in the United Arab Emirates, in a deal largely orchestrated by the Biden administration to box out China as Washington and Beijing battle over who will exercise technological influence in the Gulf region and beyond.

Under the partnership, Microsoft will give G42 permission to sell Microsoft services that use powerful A.I. chips, which are used to train and fine-tune generative A.I. models. In return, G42, which has been under scrutiny by Washington for its ties to China, will use Microsoft’s cloud services and accede to a security arrangement negotiated in detailed conversations with the U.S. government. It places a series of protections on the A.I. products shared with G42 and includes an agreement to strip Chinese gear out of G42’s operations, among other steps.

“When it comes to emerging technology, you cannot be both in China’s camp and our camp,” said Gina Raimondo, the Commerce Secretary, who traveled twice to the U.A.E. to talk about security arrangements for this and other partnerships.

The accord is highly unusual, Brad Smith, Microsoft’s president, said in an interview, reflecting the U.S. government’s extraordinary concern about protecting the intellectual property behind A.I. programs.

“The U.S. is quite naturally concerned that the most important technology is guarded by a trusted U.S. company,” said Mr. Smith, who will take a seat on G42’s board.

The investment could help the United States push back against China’s rising influence in the Gulf region. If the moves succeed, G42 would be brought into the U.S. fold and pare back its ties with China. The deal could also become a model for how U.S. firms leverage their technological leadership in A.I. to lure countries away from Chinese tech, while reaping huge financial awards.

But the matter is sensitive, as U.S. officials have raised questions about G42. This year, a congressional committee wrote a letter urging the Commerce Department to look into whether G42 should be put under trade restrictions for its ties to China, which include partnerships with Chinese firms and employees who came from government-connected companies.

In an interview, Ms. Raimondo, who has been at the center of an effort to prevent China from obtaining the most advanced semiconductors and the equipment to make them, said the agreement “does not authorize the transfer of artificial intelligence, or A.I. models, or GPUs” — the processors needed to develop A.I. applications — and “assures those technologies can be safely developed, protected and deployed.”

While the U.A.E. and United States did not sign a separate accord, Ms. Raimondo said, “We have been extensively briefed and we are comfortable that this agreement is consistent with our values.”

In a statement, Peng Xiao, the group chief executive of G42, said that “through Microsoft’s strategic investment, we are advancing our mission to deliver cutting-edge A.I. technologies at scale.”

The United States and China have been racing to exert technological influence in the Gulf, where hundreds of billions of dollars are up for grabs and major investors, including Saudi Arabia, are expected to spend billions on the technology. In the rush to diversify away from oil, many leaders in the region have set their sights on A.I. — and have been happy to play the United States and China off each other.

Although the U.A.E. is an important U.S. diplomatic and intelligence partner, and one of the largest buyers of American weapons, it has increasingly expanded its military and economic ties with China. A portion of its domestic surveillance system is built on Chinese technology and its telecommunications work on hardware from Huawei, a Chinese supplier. That has fed the worries of U.S. officials, who often visit the Persian Gulf nation to discuss security issues.

But U.S. officials are also concerned that the spread of powerful A.I. technology critical to national security could eventually be used by China or by Chinese government-linked engineers, if not sufficiently guarded. Last month, a U.S. cybersecurity review board sharply criticized Microsoft over a hack in which Chinese attackers gained access to data from top officials. Any major leak — for instance, by G42 selling Microsoft A.I. solutions to companies set up in the region by China — would go against Biden administration policies that have sought to limit China’s access to the cutting-edge technology.

“This is among the most advanced technology that the U.S. possesses,” said Gregory Allen, a researcher at the Center for Strategic and International Studies and a former U.S. defense official who worked on A.I. “There should be very strategic rationale for offshoring it anywhere.”

For Microsoft, a deal with G42 offers potential access to huge Emirati wealth. The company, whose chairman is Sheikh Tahnoon bin Zayed, the Emirates’ national security adviser and the younger brother of the country’s ruler, is a core part of the U.A.E.’s efforts to become a major A.I. player.

Despite a name whimsically drawn from “The Hitchhiker’s Guide to the Galaxy,” in which the answer to the “ultimate question of life” is 42, G42 is deeply embedded in the Emirati security state. It specializes in A.I. and recently worked to build an Arabic chatbot, called Jais.

G42 is also focused on biotechnology and surveillance. Several of its executives, including Mr. Xiao, were associated with a company called DarkMatter, an Emirati cyber-intelligence and hacking firm that employs former spies.

In its letter this year, the bipartisan House Select Committee on the Chinese Communist Party said Mr. Xiao was connected to an expansive network of companies that “materially support” the Chinese military’s technological advancement.

The origins of Tuesday’s accord go back to White House meetings last year, when top national security aides raised the question with tech executives of how to encourage business arrangements that would deepen U.S. ties to firms around the world, especially those China is also interested in.

Under the agreement, G42 will cease using Huawei telecom equipment, which the United States fears could provide a backdoor for the Chinese intelligence agencies. The accord further commits G42 to seeking permission before it shares its technologies with other governments or militaries and prohibits it from using the technology for surveillance. Microsoft will also have the power to audit G42’s use of its technology.

G42 would get use of A.I. computing power in Microsoft’s data center in the U.A.E., sensitive technology that cannot be sold in the country without an export license. Access to the computing power would likely give G42 a competitive edge in the region. A second phase of the deal, which could prove even more controversial and has not yet been negotiated, could transfer some of Microsoft’s A.I. technology to G42.

American intelligence officials have raised concerns about G42’s relationship to China in a series of classified assessments, The New York Times previously reported. Biden administration officials have also pushed their Emirati counterparts to cut the company’s ties to China. Some officials believe the U.S. pressure campaign has yielded some results, but remain concerned about less overt ties between G42 and China.

One G42 executive previously worked at the Chinese A.I. surveillance company Yitu, which has extensive ties to China’s security services and runs facial-recognition powered monitoring across the country. The company has also had ties to a Chinese genetics giant, BGI, whose subsidiaries were placed on a blacklist by the Biden administration last year. Mr. Xiao also led a firm that was involved in 2019 in starting and operating a social media app, ToTok, that U.S. intelligence agencies said was an Emirati spy tool used to harvest user data.

In recent months, G42 has agreed to walk back some of its China ties, including divesting a stake it took in TikTok owner ByteDance and pulling out Huawei technology from its operations, according to U.S. officials.

Edward Wong contributed reporting.



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Elon Musk Talks on the Phone With Donald Trump Several Times a Month: Report

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Elon Musk has been talking with Donald Trump “several times a month,” about a wide range of topics, according to a new report from the Wall Street Journal. And while Musk has denied rumors that he might donate money to the former president, the new reporting indicates Musk is working behind the scenes to make sure his businesses benefit if Trump is elected again in November.

Musk’s friendly rapport with Trump is notable given the fact that the billionaire tech titan said as recently as 2022 that Trump should “sail into the sunset.” But a lot has changed over the past two years, including Musk’s increasingly bizarre obsession with illegal immigration, the issue that first made Trump a serious contender in the Republican Party back in 2015.

From the Journal:

The pair have held discussions on immigration, technology and science, including the U.S. Space Force. Their views and interests have grown more aligned, the people said, with Musk calling Trump directly on his cellphone.

Recent talks between the two men have also involved Musk’s companies, including SpaceX, Tesla, and X, according to the Journal. And that makes sense when you remember how dependent Musk’s companies have been on government funding. SpaceX has massive contracts with military and intelligence agencies, and Tesla has benefited greatly from EV tax credits.

The new reporting notes Musk and Trump have discussed EV credits and the electric vehicle industry more broadly, citing people close to Trump, which is curious if only because the former president has recently said he wants to stop all EV sales in the U.S.

Musk has also asked Trump to return to X, a platform Trump was banned from in the days after the attempted coup of January 6, 2021. That was an era before Musk owned the social media platform, of course, but it makes sense that Trump would be cautious about rejoining a platform he doesn’t control. Trump lost his megaphone after the insurrection, and the former president seems determined not to lose his voice if things get violent again.

Trump is also making money hand-over-fist with Truth Social, the platform he founded to ensure nobody can silence him. Trump Media and Technology Group, which owns Truth Social, lost about $300 million last quarter, according to the Associated Press.

Musk didn’t respond to questions emailed on Wednesday but the Trump campaign released a statement that asserted the former president’s authority while trying to attach him to Musk.

“President Trump will be the only voice of what role an individual plays in his presidency,” Brian Hughes, senior Advisor to the Trump campaign, told Gizmodo in an email.

“But it has been widely reported and is demonstrated in a number of ways, that many of the nation’s most important leaders in technology and innovation are concerned with the damage done to their industry by Biden’s failures to handle our economy and his moves to overburden innovators with government bureaucracy and unrelenting regulation,” Hughes continued.

Musk has previously said he used to be a Democrat, claiming he voted for a Republican for the first time in 2022. But whatever Musk’s political history he seems to be all-in on Trumpism. And while Musk may not be personally donating money to Trump’s campaign, he’s working to get the man elected by lobbying powerful people to help Trump retake the White House.

Musk even teamed up with billionaire investor Nelson Peltz to work on some kind of “data-driven” project to fight against supposed election fraud. The issue is near and dear to Trump’s heart since the former president falsely claims he actually won the 2020 election. However, details surrounding the voting project seem to be sparse.

From the Journal:

Musk and Peltz have told acquaintances they are working on a massive data-driven project to ensure votes are fairly counted, echoing Trump’s accusations of widespread fraud in the 2020 election. Trump’s own attorney general, Bill Barr, has rejected those claims about the 2020 election. Trump’s campaign and its allies lost dozens of lawsuits challenging the results.

Musk and Peltz described the initiative to Trump in the March meeting, according to a person familiar with that discussion. More details about the antifraud effort couldn’t be learned.

All we know for certain is that Musk is fully on board the Trump train. And if Trump wins in November—which is a very distinct possibility the way the national polls look—Musk could have an important role to play in steering the country.

7:38 p.m. ET: Updated with comment from the Trump campaign.



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‘Largest Botnet Ever’ Tied to Billions in Stolen Covid-19 Relief Funds

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The United States Department of Justice on Wednesday announced charges against a 35-year-old Chinese national, Yunhe Wang, accused of operating a massive botnet allegedly linked to billions of dollars in fraud, child exploitation, and bomb threats, among other crimes.

Wang, identified by numerous pseudonyms—Tom Long and Jack Wan, among others—was arrested on May 24 and is accused of distributing malware through various pop-up VPN services, such as “ProxyGate” and “MaskVPN,” and by embedding viruses in internet files distributed via peer-to-peer networks known as torrents.

The malware is said to have compromised computers located in nearly every country in the world, turning them into proxies through which criminals were able to hide their identities while committing countless crimes. According to prosecutors in the US, this included the theft of billions of dollars slated for Covid-19 pandemic relief—funds allegedly stolen by foreign actors posing as unemployed US citizens.

According to an indictment, the infected computers allegedly provided Wang’s customers with a persistent backdoor, allowing them to disguise themselves as any one of the victims of Wang’s malware. This illicit proxy service, known as “911 S5,” launched as early as 2014, the US government says.

“The 911 S5 Botnet infected computers in nearly 200 countries and facilitated a whole host of computer-enabled crimes, including financial frauds, identity theft, and child exploitation,” says FBI director Christopher Wray, who described the illicit service as “likely the world’s largest botnet ever.”

The US Treasury Department has also sanctioned Wang and two other individuals allegedly tied to 911 S5.

Wang is said to have amassed access to nearly 614,000 IP addresses in the US and more than 18 million others worldwide—collectively forming the botnet. 911 S5’s customers were able to filter the IPs geographically to choose where they’d like to appear to be located, down to a specific US zip code, the DOJ claims.

The indictment states that of the 150 dedicated servers used to manage the botnet, as many as 76 were leased by US-based service providers, including the one hosting 911 S5’s client interface, which allowed criminals overseas to purchase goods using stolen credit cards, in many cases for the alleged purpose of circumventing US export laws.

More than half a million fraudulent claims lodged with pandemic relief programs in the United States are allegedly tied to 911 S5. According to the indictment, nearly $6 billion in losses have been linked to IP addresses captured by 911 S5. Many of the IP addresses have been reportedly tied to more insidious crimes, including bomb threats and the trafficking of child sexual abuse material, or CSAM.

“Proxy services like 911 S5 are pervasive threats that shield criminals behind the compromised IP addresses of residential computers worldwide,” says Damien Diggs, the US attorney for the Eastern District of Texas, where the charges against Wang were brought by a grand jury earlier this month.

Adds Nicole Argentieri, head of the Justice Department’s Criminal Division: “These criminals used the hijacked computers to conceal their identities and commit a host of crimes, from fraud to cyberstalking.”

At the time of writing, it is unclear whether these virtual impersonations resulted in any criminal investigations or charges against US-based victims whose IP addresses were hijacked as part of the 911 S5 botnet. WIRED is awaiting a response from the Department of Justice regarding this concern.

According to the Justice Department, law enforcement agencies in Singapore, Thailand, and Germany collaborated with US authorities to effect Wang’s arrest.

Wang faces charges of conspiracy, computer fraud, conspiracy to commit wire fraud, and conspiracy to money laundering, with a maximum penalty of 65 years in prison. The US is also seeking to seize a mountain of luxury cars and goods allegedly owned by Wang, including a 2022 Ferrari Spider valued at roughly half a million dollars as well as a Patek Philippe watch worth potentially several times that amount.



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Fitbit Ace LTE hands-on: a Nintendo-like smartwatch for kids

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When Fitbit invited me to a demo of the Ace LTE, its new tracker for kids, I didn’t expect much. The previous Ace trackers were pared-down Fitbit bands that didn’t do much and lacked GPS. Other smartwatches for kids tend to be boxy, glorified GPS trackers, designed to appeal more to parents than kids. But the Ace LTE? This is a kids smartwatch that feels like it might actually be fun to wear. I kind of wish there were something like it for adults.

The $229.95 Ace LTE has a squarish case that’s reminiscent of the Fitbit Versa. The main difference is that the materials are more appropriate for kids. (Think plastic and Corning Gorilla Glass instead of sapphire crystal and titanium.) There’s also an optional bumper for extra durability. However, if you flip it upside down, the sensor array looks nearly identical to the Pixel Watch 2. A neat perk is that if you have a Pixel Watch 2, this uses the same charger.

It gets about 16 hours of battery life, but fast charging means you get 60 percent in 30 minutes.

The Ace LTE’s whole schtick is exercise should be a form of play. In fact, it’s more like a game console strapped to your wrist than a traditional smartwatch. Instead of apps, the watch comes with a bunch of preloaded video games. The concept is instead of interval training, where you sprinkle bits of high-intensity suffering into a workout, the Ace LTE employs interval gaming. Once they’ve played a certain amount, kids are prompted to add to their step count to earn more playing time.

There’s also an Eejie, a Tamagotchi-like buddy who lives in the Ace LTE. This, too, is a bit like Animal Crossing in that you can buy an Eejie in-game items, rooms, clothes, and other accessories. But instead of microtransactions using real-life money, you have to buy those items using arcade tickets. Those, in turn, can only be won by making progress on daily goals or by playing games.

There’ll be six collectible bands to start, each costing $35.

The special connector acts as a “game cartridge,” holding exclusive items for Eejies, a Tamogatchi-like buddy.

Each Ace LTE band is also a collectible. Once popped on, a band unlocks new outfits for the Eejie, exclusive collectibles, and a themed noodle — the animated ring that represents your daily progress. Additional bands cost $35 and have their own themes. The idea is that kids can trade bands to get items, much in the way us ancient nerds traded POG slammers and Pokémon cards.

I got to try two games: Smokey Lake and Pollo 13. The former is a fishing game that reminded me of how you collect fish in Animal Crossing or Stardew Valley. It involves viewing your virtual environment, casting your arm out to catch a fish, and pulling it back to reel it in. Pollo 13 was a Mario Kart-esque game where you play as a chicken racing in a bathtub, collecting eggs to get powers. You race by tilting your arm, and the aim is to best your archnemesis, Kim. (I don’t know what Kim did, but she ate my dust.) After playing a bit of both, I was prompted to take around 500 steps so I could play more.

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Everything is controlled through the Fitbit Ace app, which works on iOS and Android.
Image: Fitbit

But the gaming is only one aspect of the Ace LTE. The other is to help kids stay connected to their parents. While previous Fitbit Ace devices didn’t have GPS tracking, this one comes with LTE built in. That enables calling, messaging, and location sharing. The bad news is getting those features requires a $9.99 monthly or $120 annual subscription to the Ace Pass data plan. The good news is you don’t have to go through a carrier, nor does a kid need their own phone.

Everything is controlled through the Fitbit Ace companion app, which works on both iOS and Android. The app is where parents can set trusted contacts, send and receive messages, view their child’s real-time location, and monitor how their child is doing with regard to their activity goals. There’s also a school time mode, which disables gaming during school hours. Later this year, Fitbit says that it will also add Tap to Pay.

It looks a lot like a Fitbit Versa on the wrist, but the internal hardware is closer to a Pixel Watch 2.

Kids smartwatches always raise an extra question of privacy. Fitbit told me at the demo that only parents can access location data, which is deleted after 24 hours. Activity data is deleted after 35 days and will not be used for Google ads. The Ace LTE also will not include third-party apps or ads. Of course, this is what Google, which owns Fitbit, says upfront. If you’re worried about the fine print, concerned parents should also look at the Fitbit Ace privacy policy.

We’ll have to test the Ace LTE to see how well it works — both as a means of encouraging kids to move more and as a tool for parents. That said, this is a significant update to the Ace lineup and one of the more fun approaches to a smartwatch for kids that we’ve seen in a while.

The Fitbit Ace LTE is available starting on June 5th for $229.95, with an Ace Pass priced at $9.99 monthly or $119.99 annually. Annual subscribers get an extra collectible band, and those who buy it by August 31st will get 50 percent off the subscription cost.



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