Tech

Global cloud platforms offer Saudis data protection promises

September 13, 2024, 7:52 AM

The global titans in the cloud computing market are jostling to get a foothold in Saudi Arabia

Saudi Arabia’s budget is $18bn
Big players to build data centres
Saudi Telecom and Alibaba take lead

Saudi Arabia’s cloud computing market is heating up as global players find a footing in the country with promises to secure government information.

Saudi Arabia has set aside $18 billion to become a regional leader in cloud computing, the Saudi Data and AI Authority said this week, allowing foreign companies to open data centres.

Saudi Arabia has eight “cloud regions” where 29 local and international providers have set up data centres, including Cloud Computing Special Economic Zone in Riyadh.

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Chinese giant Alibaba was the first mover, setting up a partnership with state-owned Saudi Telecom (STC) in 2022 that opened the first two of 16 data centres it is building around the country.

“We’re the first hyperscaler in Saudi Arabia,” said Faisal Alkahtani, an STC advisor, using the term for the global tech majors in cloud technology – Amazon Web Services, Microsoft Azure, Google Cloud, IBM, Oracle and Alibaba.

“We take the technology of Alibaba cloud but using the know-how of local Saudis. The branding is up to us since we understand Saudis better than an international company,” he said of the partnership, which was set up as Saudi Cloud Computing Company in 2022.

Alibaba has said it will invest $500 million in Saudi Arabia by 2027.

The others, all US-based, are running to catch up. Oracle is investing $1.5 billion in three public cloud regions in Jeddah, Riyadh and Neom. Google Cloud opened a cloud region in Dammam last November.

Amazon said in March it was investing $5.3 billion to set an in-country cloud infrastructure with data centres by 2026. China’s Huawei Cloud opened a data centre in Riyadh in September 2023.

Localised data centres give the government ultimate control over information flows but allow the hyperscalers access to a lucrative market in a highly connected population of more than 32 million people.

“It’s very important to have sovereignty and localisation, and the data centres have to be within Saudi Arabia,” Alkahtani said on the sidelines of an AI forum in Riyadh this week.

“As STV (Saudi Technology Ventures) all our data centres are in Saudi Arabia, so we are the sole custodian of anything that’s being hosted, it doesn’t even go outside to our partners.”

In November last year the United States imposed export controls on Nvidia’s most powerful chips to prevent risk of technology transfer to China. Yet Saudi Arabia has boosted cooperation with Nvidia this year. A Gulf-based diplomat said Saudi Arabia’s close ties to the US and China made it a concern to US authorities.