Saudi Arabia set to become a futuristic tech hub
Last month, the Saudi government approved a decision to cut the power cost for public cloud computing operators in the country. Operators with licences issued by the Saudi regulator, the Communications and Information Technology Commission, will be charged less than $0.05 per kilowatt-hour, thought to be one of the cheapest rates in the world.
The decision is part of the government’s plan to upgrade its technology infrastructure, diversify its economy and loosen its dependence on revenue from fossil fuels. The framework, known as Saudi Vision 2030, was first announced in 2016 by Crown Prince Mohammed bin Salman. From the viewpoint of the Saudi people, an important goal of this initiative is the development of public services such as health, education, infrastructure, recreation and tourism.
The most crucial aspect of the framework is that it encourages foreign investment. Although Saudi Arabia has its own technology ecosystem, teaming up with global tech giants offers a quick and efficient way to introduce further innovation into the country. Saudi Arabia is rich enough that it can negotiate lucrative deals that can have a positive impact on the region. And with this in mind, there have been some significant milestones.
In December 2020, Alibaba announced that it was forming a partnership with Saudi Arabia’s state-owned operator STC and venture capital fund eWTP Arabia Capital. The partnership will develop a public cloud platform that will support the digitization of local businesses as well as small and medium enterprises in the country. The venture involves a $500 million investment over the next five years.
Not to be outdone by Alibaba, in the same month Google Cloud revealed it was joining forces with Saudi Aramco, a state-owned oil producer. According to Aramco, demand for cloud services is growing so much that the market will be worth up to $10 billion by 2030. Google will launch a cloud region enabling it to provide high-performance, low-latency cloud services in the country.
Although it’s true that the country will benefit from this type of investment, cloud technology typically operates within the limits of the infrastructure used to support it. STC already has extensive fibre-to-the-home and LTE networks, but combining this with an undersea cable network is a quick and effective way to further boost network capacity and speed to levels that will make a real difference to Saudi Arabia’s digital economy.
Such are the lofty ambitions of Google, which announced plans in November 2020 to install an undersea fibre-optic cable spanning more than 5,000 miles. The project, known as Blue Raman, involves connecting the city of Genoa in northern Italy with Mumbai in India. The cable is expected to reach Israel by 2022 and, in a historical first, it will link Israel and Saudi Arabia.
As you can imagine, Google’s biggest challenge with this project is a geopolitical one. For its project to be a success, the company needs the cooperation of all nations involved. This includes agreements from both Saudi Arabia and Israel, two neighbouring states that share an acrimonious history.
Relations between neighbouring countries aren’t the only political hurdle to foreign investment in Saudi Arabia by the tech giants. When Google first announced that it had signed a memorandum of understanding with Saudi Aramco in 2018, many people opposed the deal because of concerns about Saudi Arabia’s sketchy human rights record. In addition, despite having strong economic ties with the country, the US government has voiced concerns about the state that in some ways mirror its current attitude toward China.
Despite this, the Saudi government remains confident that it will be able to fulfil the ambitions defined by its Vision 2030 framework. In January 2021, it unveiled its plan to build a $500 billion megacity called Neom in Tabuk Province in the north-west of the country. Scheduled for completion in 2025, the city will be 33 times the size of New York City.
It’s reported that the city will feature technological advances only imagined in futuristic sci-fi movies, with artificial rain, robotic maids and holographic teachers. This all sounds impressive, but it’s a vision that depends on the success of projects that are closer to completion in today’s world.
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