Beyond oil: Google's big bet on Saudi Arabia's AI future

In a landmark move signaling the growing importance of the Middle East in the global tech landscape, Google has entered into a strategic partnership with Saudi Arabia's Public Investment Fund (PIF), the kingdom’s sovereign wealth fund. Google Cloud and PIF announced the agreement, which would see the establishment of a new artificial intelligence (AI) hub in Saudi Arabia, on the sidelines of the Future Investment Initiative 8th Edition (FII8) conference in Riyadh. The hub, to be located near Dammam in the Eastern Province, will feature the latest Google Cloud infrastructure, including tensor processing units (TPUs) and graphics processing units (GPUs). The partnership aims to position Saudi Arabia as a global AI leader, drive advancements in Arabic language AI models, and create thousands of jobs in the technology sector. The partnership underscores the “growing interlink” between AI and energy, as Saudi Arabia — along with the United Arab Emirates and other Gulf states — uses its energy surplus to power data centers, a critical pillar of AI infrastructure. This energy advantage makes the region increasingly attractive to tech giants like Google, Microsoft, Nvidia, and Amazon. 

The Google-PIF partnership comes after PIF announced its plans to cut overseas investments in favor of bolstering the domestic economy, reflecting Riyadh's commitment to technology as a driver of economic diversification. At the heart of this partnership is an expanded data center funded by PIF, which will support Google's efforts to meet the rising demand for AI-driven services across the Middle East. The partnership consists of three primary components. First, the Google-operated data center will be funded by PIF to enhance infrastructure capacity and make the kingdom a regional hub for AI and cloud services. Second, Google and PIF will jointly market Google's AI offerings to regional and international clients, enhancing Google’s reach across the Gulf while positioning Saudi Arabia as a central player in the digital economy. Finally, the partnership emphasizes upskilling the local workforce, thus addressing the need for AI and tech talent in Saudi Arabia. It also represents a significant opportunity to boost the participation of women in the workforce, which has already been experiencing a surge as a result of the kingdom’s economic diversification efforts. Through educational initiatives and training programs, Google and PIF aim to build a sustainable pipeline of talent to support long-term growth in the AI sector.

US government coordination

The importance of this partnership extends beyond commercial interests. Given the current geopolitical landscape, the collaboration is likely to be closely coordinated with agencies in the United States, such as the National Security Council and the Department of Commerce. This alignment with the US government reflects the national security aspect of AI systems and the rapidly changing nature of export controls, which are prompting US tech giants to exercise caution when conducting deals in foreign countries to avoid potential regulatory hurdles. The Google-PIF partnership differs significantly from the G42-Microsoft deal in several key ways.

First, while the G42-Microsoft arrangement may involve co-developing new AI capabilities, the Google-PIF deal does not include transferring model weights or co-creating AI technology with PIF. Instead, Google’s offerings will remain commercially available AI services, with Google likely retaining full operational control over the data center. Second, while the G42-Microsoft arrangement involved proprietary technology, such as H100 chips and a private network, the Google-PIF collaboration is straightforward, involving only an expansion of Google’s existing data center and services, without closed environments or proprietary transfers.

Strategic implications for the region

Saudi Arabia's partnership with Google marks a bold move in its drive to become a digital economy leader, attracting top-tier tech firms while cultivating local talent. By building up Saudi Arabia’s tech infrastructure, this deal positions the kingdom as an appealing hub for global businesses needing high-capacity data services and advanced AI capabilities. Beyond fostering economic growth, the partnership signals a national commitment to innovation. As Riyadh shifts away from oil dependency, the Google-PIF partnership shows how strategic investments in technology can reshape the country’s economic identity. By enhancing its data and AI capacities, Saudi Arabia is emerging as a critical player in the digital economy of the Middle East, with the potential to shape tech policy and infrastructure across neighboring states. The Google-PIF partnership, along with the Microsoft-G42 deal, could incentivize other Gulf states, including Bahrain, Oman, Kuwait, and Qatar, to strike similar deals, collectively transforming the region into an AI cluster and positioning it as a strategic hub for Western and Asian tech companies.

The Google-PIF partnership symbolizes the evolution of US-Saudi relations, reflecting the beginning of a shift from traditional energy ties to a dynamic partnership centered on technology and innovation. This partnership also represents a new Gulf model of collaboration — supported by the US government — with global tech leaders. In a Middle East increasingly defined by digital ambitions and rapid AI infrastructure expansion, the Google-PIF partnership and similar deals, such as Microsoft’s agreement with G42, signal a profound shift, underscoring the region’s readiness to emerge as a central force in the global tech ecosystem.

 

Mohammed Soliman is the director of MEI’s Strategic Technologies and Cyber Security Program and a member of McLarty Associates’ Middle East and North Africa Practice. His work focuses on the intersection of technology, geopolitics, and business in the Middle East and North Africa.

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