Amazon in talks to open in Saudi Arabia

Apple and Amazon are in licensing discussions with Riyadh on investing in Saudi Arabia, two sources told Reuters news agency. 

Both companies already sell products in Saudi Arabia via third parties but they and other global tech giants have yet to establish a direct presence.

According to Alexa internet rankings, Amazon.com is the 23rd most visited website in Saudi Arabia as of December.

Amazon’s discussions are being led by cloud computing division Amazon Web Services (AWS), which would introduce stiff competition in a market currently dominated by smaller local providers like STC and Mobily.

Riyadh has been easing regulatory impediments for the past two years, including limits on foreign ownership which had long kept investors away, since falling crude prices highlighted the need to diversify its oil-dependent economy.

Saudi Arabia’s young and relatively affluent market boasts some of the highest internet and smartphone use in the world.

About 70 percent of the Saudi population is under 30 and frequently glued to social media.

Amazon’s talks are in earlier stages and no specific date has been set for investment plans, Reuters sources said.

Amazon acquired Dubai-based online retailer Souq.com earlier in 2017, opening access for Amazon retail goods to be sold in the kingdom.

Saudi investments 

During an official visit to the United States last year Saudi Arabia’s Crown Prince Mohammed bin Salman met executives at Facebook, Microsoft and Uber, in which the sovereign wealth fund he chairs later took a $3.5bn stake.

Since then, he has also set up a $45bn technology investment fund with Japan’s SoftBank and announced plans to create a futuristic $500bn mega-city with more robots than humans.

Apple and Amazon have both been on a Saudi priority list of foreign firms which officials hope to attract to further their reforms, one of the sources said.

“Many tech multinationals now in Saudi Arabia are either vendors to the Saudi government or, in the case of Uber, have benefited from a sizable Saudi investment,” said Sam Blatteis, who heads Dubai-based tech advisory MENA Catalysts Inc.

Founder, chairman and CEO of #Amazon Jeff Bezos was in Saudi Arabia this week! (Saudi Press Agency photo) pic.twitter.com/RStefRmk8g

— Layan Damanhouri (@layanzd) November 10, 2016

Cloud market

For Amazon, the move underscores how AWS is looking to take an early lead in selling data storage and computing services to customers in the Middle East.

AWS, the world’s biggest cloud business by revenue, has embarked on a slower global expansion than Number two Microsoft, which now offers cloud services in twice as many regions.

However, Microsoft has yet to announce plans for data centres in the Middle East, with three regions in India serving as its closest operations.

AWS said in September it would set up data centres for the region in neighbouring Bahrain.

The kingdom has been streamlining its many overlapping laws which could apply to cloud computing for more than a year in order to attract service providers.

If completed, a cloud deal could pave the way for an expansion of Amazon retail warehouses in Saudi Arabia.