RIYADH — Saudi Telecom Company (STC), the largest telecom operator in the Kingdom, and eWTP Arabia Capital, one of the largest venture capital funds in the region, jointly announced on Monday that they will partner with Alibaba Cloud, the digital technology and intelligence backbone of Alibaba Group to provide the high-performance public cloud service in Saudi Arabia.

The company views the Kingdom as the strategic epicenter of its operations in the region and is keen to make its contribution to Saudi Arabia’s Vision 2030.

Under this partnership, STC will be able to leverage the proven cloud-based technologies and services of Alibaba Cloud to accelerate the growth of the local technology ecosystem.

Alibaba Cloud is planning to invest in the Kingdom, up to USD 500 million over the next five years. The investment will including provide world-class comprehensive resources to help build sustainability and ensure localization.

In addition, a new office will be set up in Riyadh to provide better services to local customers, also be the regional training and management center for the next chapter.

As one of the world’s top cloud providers, Alibaba Cloud’s public cloud offerings will cover the latest advancements on the public cloud platform which have been used to support the business of Alibaba Group, taking the digitalization of local enterprises and SMEs to the next level.

“Saudi Arabia is a strategic market for us. Alibaba Cloud is committed to delivering our best-in-class services, solutions as well as our business practices in digital transformation to the partners and customers we work with in the Kingdom.

We will invest and provide a wide range of resources to support our partners locally,” said Jeff Zhang, CEO of Alibaba Cloud Intelligence, Partner of Alibaba Group.

Abdullah Amer Al-Swaha, Minister of Communications and Information Technology, commented that MCIT would like to support companies with wise foresight such as Alibaba Cloud, and they look forward to Alibaba Cloud’s future performance and contribution to Saudi Arabia’s Vision 2030.

“This collaboration is a significant milestone for STC in our efforts to contribute to Saudi Arabia’s Vision 2030 by introducing a trusted cloud service partner.

It’s pivotal for companies to deploy and maintain an elastic, scalable, and secure IT infrastructure to keep competitive and innovative in the digital era.

We are excited to partner with Alibaba Cloud to bring their expertise to our customers,” said Eng. Nasser Bin Sulaiman Al Nasser, CEO of STC Group.

Jerry Li, Managing Partner of eWTP Arabia Fund shows great confidence, “eWTP Arabia Capital is committed to ensuring that this partnership makes a strong effort toward the realization of Vision 2030 goals. We are very proud and thankful to bring both these great companies together with the support of the Saudi Federation for Cybersecurity Programming and Drones.

Google will open a “cloud region” where it can provide its cloud services in Saudi Arabia via a joint venture with state-owned oil producer Saudi Aramco, as Covid-19 prompts a landmark acceleration in digital adoption across the Gulf.

Aramco’s Statement
“The collaboration taps into rapidly expanding cloud services demand in Saudi Arabia, which is forecast to reach a market opportunity up to $10 billion by 2030,” Aramco said in a statement on Monday.

Aramco said the agreement with Google will deliver “high performance, low-latency cloud services to enterprise customers in Saudi Arabia” as warming relations in the region open the political space for U.S. technology companies to expand into the kingdom.

Google-Saudi Aramco Deal
Google began negotiations with Saudi Arabia on the project in 2018, but talks reportedly stalled following the murder of journalist Jamal Khashoggi by state agents in the same year. Google Cloud is now moving ahead with plans to establish and operate a new cloud region in the kingdom. No financial terms were disclosed.

The technology agreement also shows Silicon Valley elites are comfortable doing public business with the regime, despite some concerns over Saudi Arabia’s global role as an exporter of fossil fuels and its poor human rights record.

Google said its investment into Saudi Arabia will allow businesses to grow and scale their offerings in the kingdom. The deal also boosts its cloud computing business, which brings in more than $10 billion in annual revenue for its parent, Alphabet Inc.

Who Are The Customers?
Regional e-commerce firm Noon and social media platform Snap were named as customers.

“In order to deliver a positive user experience, it is important to put our infrastructure as close as possible to our customers,” Karl D’Adamo, senior director for infrastructure at Snap Inc., said in a statement.

“With the new Google Cloud region in the Kingdom of Saudi Arabia, we will be able to securely deliver services to our nearby customers at higher speeds and with greater flexibility,” Hisham Zarka, CTO and managing director at Noon said.

Google competes with Microsoft and Amazon in the growing cloud-computing market globally. Google currently operates in 24 regions with 73 availability zones, less than its primary competitors Microsoft Azure and market leader Amazon Web Services.

Amazon Web Services launched its first cloud region in the Middle East in Bahrain last year, servicing top tier local clients such as Emirati bank Emirates NBD and rideshare service Careem. Microsoft launched its offering in the United Arab Emirates around the same time, making Google a later entrant to the regional scene.

Diversification Of Saudi Economy
Saudi Arabia has been actively courting Silicon Valley, seeking foreign investment to bolster its ambitious Vision 2030 reform plans and diversify its oil-dependent economy. The kingdom already invests significantly in American technology firms via its Public Investment Fund.

The new infrastructure will accelerate Saudi Arabia’s tech industry, which has one of the fastest-growing cloud adoption rates in the region, according to Oxford Business Group, which expects the new centers will boost usage further.

Saudi Arabia also marked a milestone last month following the crowning of the country’s first tech unicorn. Saudi Arabia’s STC Pay now plans to expand its financial services offering across the Gulf region, after achieving a billion-dollar “unicorn” valuation on the back of a deal with Western Union.

“The future of Saudi Arabia’s business transformation and growth depends on its ability to successfully leverage cloud services,” Ahmad Al Sa’adi, Aramco’s senior vice president of technical services, said. It’s thought the Google cloud solution would offer Saudi businesses increased access to artificial intelligence, smart analytics, data management, security and other Google services.

Other Developments
The growing tech ties in the Kingdom come amid reports Google was preparing to establish a fiber optic network that will connect Europe and India through Israel and Saudi Arabia. The project has the potential to link Saudi Arabia and Israel for the first time, in another sign of warming relations despite the two countries having no formal diplomatic ties.

The underwater cable project, called Blue Raman route, is said to be nearly 5,000 miles long and is expected to cost $400 million.

Saudi government authorities have not publicly given approval for the project. The Wall Street Journal, citing sources, said Google could seek support from telecom partners to finance the initiative and share infrastructure.

Google has also announced plans to launch a cloud computing center in Qatar, which has been subject to a regional blockade led by Saudi Arabia, the UAE, Bahrain and Egypt since 2017.

Synopsis
Google Cloud and Saudi Aramco will partner to deliver cloud infrastructure to Saudi Arabia, as Covid-19 accelerates rapid digital adoption in the Gulf.

The agreement paves the way for a rollout of high-performance, low-latency cloud services to meet rapidity rising demand in Saudi Arabia.

Technology is seen as critical in modernizing Saudi Arabia’s oil-dependent economy and could play a role in further thawing regional relations.