Microsoft President Brad Smith remarked at GITEX Global 2024 in Dubai that artificial intelligence currently faces fewer regulations than milk, drawing a stark contrast between the oversight of a everyday commodity and the rapid deployment of AI systems. He made the comment during a panel on AI governance attended by UAE Minister of AI Omar Sultan Al Olama and Saudi Arabia’s Minister of Communications and Information Technology Abdullah Alswaha. Smith noted that while Microsoft has invested over $2 billion in UAE cloud infrastructure since launching its Azure region in 2023, the region’s regulatory frameworks remain nascent, with only draft AI ethics guidelines published by the UAE’s AI Office in 2022 and Saudi Arabia’s National Strategy for Data and AI targeting a $135 billion GDP contribution by 2030.

The analogy underscores a growing tension: Gulf states are racing to become global AI hubs, yet their regulatory safety nets lag far behind the pace of investment and deployment. Without clear rules, there is a risk of ethical lapses, biased outcomes, and over‑reliance on foreign technology providers, which could undermine long‑term sovereignty and public trust. In the longer term, this gap may spur a wave of localized regulation, push for sovereign AI models, and reshape talent flows as engineers seek environments where innovation is balanced with accountability.

Winners include Microsoft and other cloud providers that can shape early‑stage markets, Gulf sovereign wealth funds eager to deploy capital into AI‑driven projects, and large contractors building AI‑enabled smart cities like NEOM. Losers are local startups lacking compliance expertise, regulators scrambling to craft effective rules without stifling growth, and consumers who may encounter opaque AI systems in services ranging from hiring to healthcare without adequate recourse.

Watch for the UAE’s forthcoming AI law draft expected in Q1 2025, which aims to introduce licensing requirements for high‑risk AI applications. Saudi Arabia’s AI Ethics Framework, slated for rollout mid‑2025, will also be a key test of how quickly the kingdom can translate strategy into enforceable standards. Additionally, Microsoft’s expanding partnership with NEOM on AI‑powered urban planning will signal whether global tech giants can align with regional ambitions under emerging regulatory scrutiny.