Google's new AI hub in Saudi Arabia to focus on localised apps and could add $71bn to economy

Google's cloud unit and Saudi Arabia's Public Investment Fund have teamed up to build an artificial intelligence hub in the kingdom focused on developing Arabic language models and Saudi-specific applications to boost the country's technological capabilities.

The Google Cloud facility will be built in the Eastern Province's capital, Dammam, and is designed to upskill “millions” of students and professionals, the Alphabet unit said in a statement. The new AI hub could potentially contribute about $71 billion to the Saudi economy over the next eight years, according to a study Google conducted with London-based advisory firm Access Partnership.

The increased economic activity from AI adoption in Saudi Arabia is expected to create thousands of highly-skilled direct and indirect jobs, the research added.

The agreement was signed on Wednesday by Ruth Porat, president and chief investment officer of Google and Alphabet, and Yasir Al Rumayyan, governor of the PIF, on the sidelines of the Future Investment Initiative summit in Riyadh.

Google did not reveal how much will be invested in the hub, nor when it will open or when construction will begin. The partnership is subject to regulatory approvals, it said.

The deal is expected to accelerate the adoption of AI – in Arabic – across key industries, including health care, retail and financial services, in Saudi Arabia, the Middle East, Africa and “around the world”, Ms Porat said.

“As part of Saudi Arabia’s rich technology ecosystem, we aim to create highly skilled jobs for Saudis and opportunities for global businesses to fuel growth through cloud adoption,” she added.

Google and the PIF will explore advances in the Arabic-language capabilities of Gemini – Google’s family of generative AI models – by combining additional Arabic data sets with Google Cloud technology, they said.

“Local businesses, researchers and developers will have the opportunity to connect these models to their systems so they can build sophisticated Arabic language AI agents and applications,” the statement said.

The partnership also reflects the "growing interlink" between AI and energy, as Saudi Arabia leverages its energy surplus to power its data centres, a critical component of AI infrastructure and which makes it an attractive destination for tech giants like Google, Mohammed Soliman, director of the strategic technologies and cyber security programme at the Washington, DC-based Middle East Insitute, told The National.

Technology investments are crucial to Saudi Arabia's economic plans and are one of the main pillars of Riyadh's Vision 2030 agenda as it diversifies away from oil dependence. The government also has a programme for expanding the country's information and communications technology sector by 50 per cent.

The ICT Strategy aims to establish an advanced infrastructure to accelerate the digital transformation of the Arab world's largest economy to create an “innovative future” for the kingdom, according to the Ministry of Communications and Information Technology.

The adoption of AI and cloud services has been growing in the Middle East amid the rise of technology-savvy young consumers and an evolving digital landscape, underpinned by government efforts to develop the future economy. This has given global cloud and AI service providers an incentive to tap into the region's potential.

The new AI hub is a continuation of Google's investments. It opened a cloud region in Dammam last year, one of 40 across its worldwide network. Other global companies, including Microsoft, Amazon, IBM and Alibaba Cloud have also opened cloud and data centres in the Middle East.

Google, with its Gemini platform, is one of the leading players in generative AI and is considered one of the biggest rivals of OpenAI's ChatGPT and Microsoft's Copilot.

"In a Middle East increasingly characterised by digital ambitions and rapid AI infrastructure growth, partnerships like Google's signal a profound shift, positioning the region as an emerging tech hub," Mr Soliman said.

Saudi Arabia was the region’s most-funded country for start-ups in 2023. Start-ups in the kingdom raised $1.3 billion through venture capital funding, overtaking the UAE for the first time as the top destination for VC investment in the Middle East and North Africa region, according to Magnitt.

“This partnership demonstrates PIF’s dedication to fostering an AI-friendly environment through investments in human capital and technology, upskilling thousands with cutting-edge tools to support our sustainable and innovative infrastructure goals,” Mr Al Rumayyan said.

“Saudi Arabia is a prime location for global tech partners as PIF brings both sector expertise and a long-term approach to investment.”

The PIF, meanwhile, continues to boost its portfolio of $930 billion of assets under management. The partnership with Google is in line with its strategy to cut its portfolio of foreign assets by a third and focus more on domestic markets as it aims to establish the kingdom as the global hub of AI.