G42 and Microsoft widen sovereign AI push

G42 and Microsoft have deepened their artificial intelligence alliance through a new collaboration linking Inception42’s Catalyst agentic AI platform with Microsoft Copilot, a move designed to shift AI agents from limited trials into day-to-day government and enterprise operations.

The agreement, announced on Monday, allows organisations to build, govern and monitor AI agents on Catalyst while making them available through Microsoft 365 applications including Teams, Outlook and Word. Agents developed within Microsoft Copilot will also be able to flow back into Catalyst, creating a two-way operating model intended to reduce fragmented deployments and improve oversight.

The collaboration gives public-sector bodies and large companies a route to deploy AI agents while keeping sensitive data processed inside the UAE. That point is central to the partnership, as governments, banks, energy groups and regulated companies weigh efficiency gains against concerns over data sovereignty, compliance and auditability.

Inception42, the G42 company focused on sovereign agentic AI, positions Catalyst as a platform for building agents that can operate across workflows, connect to enterprise systems and remain subject to governance controls. Microsoft brings the reach of Copilot and Microsoft 365, already embedded in many corporate and public-sector environments.

Ashish Koshy, chief executive of Inception42, said the integration showed how sovereignty and interoperability could work together. He said Catalyst gave governments and enterprises a platform to build, govern and observe agents, while demand was growing faster than any single platform could address alone.

Amr Kamel, general manager at Microsoft UAE, said customers wanted AI that was powerful, trusted, governed and practical to adopt. He said the ability to process data in-country while embedding AI in everyday tools would help organisations accelerate innovation while retaining control, security and compliance.

The announcement comes as the UAE accelerates efforts to embed agentic AI in public administration. The national agentic AI initiative targets AI support for 50 per cent of federal government operations within two years, while training plans cover 80,000 workers across senior leadership and operational roles.

Abu Dhabi has separately moved to expand Microsoft 365 Copilot across its public sector. Under the Frontier Employee Programme, 26,000 civil servants across 27 entities have received access to Copilot, adding to 9,000 existing users and taking the total to 35,000. The programme is intended to support faster decision-making, improve service delivery and make AI tools part of routine government work.

The latest step builds on a broader G42-Microsoft relationship that has grown steadily since Microsoft agreed a $1.5 billion strategic investment in the Abu Dhabi technology group in 2024. That deal gave Microsoft a minority stake in G42, placed Microsoft president Brad Smith on the G42 board and committed both sides to stronger cooperation on AI infrastructure, cloud services, safety standards and international expansion.

The partnership has also been tied to sovereign cloud development. Abu Dhabi’s agreement with Microsoft and Core42, another G42 company, is intended to create a high-performance sovereign cloud environment capable of handling more than 11 million daily digital interactions across government entities, citizens, residents and businesses. Abu Dhabi’s digital strategy for 2025-2027 includes AED13 billion in investment and a target to automate all government processes.

For G42, the Inception42-Microsoft link strengthens its role in a fast-growing market for sovereign AI, where governments and regulated companies want automation without losing control over data, models and workflows. For Microsoft, the collaboration extends Copilot’s relevance beyond productivity assistance into governed agent ecosystems that can operate across institutional processes.

Agentic AI differs from earlier chatbot-style tools because it can plan, execute tasks, call software tools, retrieve information and take limited actions with reduced human prompting. That capability has increased interest among public agencies and companies seeking productivity gains, but it has also raised questions over accountability, hallucinations, cyber risk, audit trails and the reliability of autonomous outputs.

Industry adoption remains uneven. Many organisations are experimenting with AI agents for coding, customer service, document handling, procurement, finance and internal knowledge management, but production deployments often face barriers around verification, security, data access and integration with legacy systems. Highly regulated sectors are moving more cautiously because errors in automated decisions can carry legal, financial and reputational consequences.