Saudi spends big to turn into AI superpower

NEW DELHI: On a Monday morning last month, tech executives, engineers and sales representatives from Amazon, Google, TikTok and other companies endured a three-hour traffic jam as their cars crawled toward a mammoth conference at an event space in the desert, 50 miles outside Riyadh. The lure: billions of dollars in Saudi money as the kingdom seeks to build a tech industry to complement its oil dominance. To bypass the congestion, frustrated event-goers drove onto the highway shoulder, kicking up plumes of desert sand as they sped past those following traffic rules. A lucky few took advantage of a special freeway exit dedicated to “V.V.I.P.s” — very, very important people. More than 200,000 people converged at the conference, including Adam Selipsky, chief executive of Amazon’s cloud computing division, who announced a $5.3 billion investment in Saudi Arabia for data centers and artificial intelligence technology. Arvind Krishna, the chief executive of IBM, spoke of what a government minister called a “lifetime friendship” with the kingdom. Executives from Huawei and dozens of other firms made speeches. More than $10 billion in deals were done there, according to Saudi Arabia’s state press agency.

“This is a great country,” Shou Chew, TikTok’s chief executive, said during the conference, heralding the video app’s growth in the kingdom. “We expect to invest even more.” Everybody in tech seems to want to make friends with Saudi Arabia right now as the kingdom has trained its sights on becoming a dominant player in AI — and is pumping in eye-popping sums to do so.

Saudi Arabia created a $100 billion fund this year to invest in AI and other technology. It is in talks with Andreessen Horowitz, the Silicon Valley venture capital firm, and other investors to put an additional $40 billion into AI companies. In March, the government said it would invest $1 billion in a Silicon Valley-inspired start-up accelerator to lure AI entrepreneurs to the kingdom. The initiatives easily dwarf those of most major nation-state investments, like Britain’s $100 million pledge for the Alan Turing Institute.

The spending blitz stems from a generational effort outlined in 2016 by Crown Prince Mohammed bin Salman and known as “Vision 2030.” Saudi Arabia is racing to diversify its oilrich economy in areas like tech, tourism, culture and sports — investing a reported $200 million a year for the soccer superstar Cristiano Ronaldo and planning a 100-mile-long mirrored skyscraper in the desert. For the tech industry, Saudi Arabia has long been a funding spigot. But the kingdom is now redirecting its oil wealth into building a domestic tech industry, requiring international firms to establish roots in there if they want its money.

If Prince Mohammed succeeds, he will place Saudi Arabia in the middle of an escalating global competition among China, the United States and other countries like France that have made breakthroughs in generative AI Combined with AI efforts by its neighbour, the United Arab Emirates, Saudi Arabia’s plan has the potential to create a new power center in the global tech industry.

“I hereby invite all dreamers, innovators, investors and thinkers to join us, here in the kingdom, to achieve our ambitions together,” Prince Mohammed remarked in a 2020 speech about AI. His ambitions are geopolitically delicate as China and the United States seek to carve out spheres of influence over AI to shape the future of critical technologies. In Washington, many worry that the kingdom’s goals and authoritarian leanings could work against U.S. interests — for instance, if Saudi Arabia ends up providing computing power to Chinese researchers and companies. This month, the White House brokered a deal for Microsoft to invest in G42, an AI company in the Emirates, which was intended partly to diminish China’s influence.

For China, the Persian Gulf region offers a big market, access to deep-pocketed investors and a chance to wield influence in countries traditionally allied with the United States. China’s form of A.I.-powered surveillance has already been embedded into policing in the region.

Some industry leaders have begun to arrive. Jurgen Schmidhuber, an AI pioneer who now heads an AI program at Saudi Arabia’s premier research university, King Abdullah University of Science and Technology, recalled the kingdom’s roots centuries ago as a center for science and mathematics. “It would be lovely to contribute to a new world and resurrect this golden age,” he said. “Yes, it will cost money, but there’s a lot of money in this country.”

The willingness to spend was front and center last month at a gala in Riyadh hosted by the Saudi government, which coincided with the Leap conference. Hollywood klieg lights blazed in the sky above the city as guests arrived in chauffeured Maseratis, Mercedes-Benzes and Porches. Inside a 300,000-square-foot parking garage that had been converted two years ago into one of the world’s largest start-up spaces, attendees mingled, debated opening offices in Riyadh and sipped pomegranate juice and cardamom-flavored coffee.

“There’s something happening here,” said Hilmar Veigar Petursson, the chief executive of CCP Games, the Icelandic company behind the popular game Eve Online, who was at the gala. “I got a very similar sense when I came back from China in 2005.” Prince Mohammed’s Vision 2030 project, unveiled eight years ago, seems taken from a science-fiction script. Under the plan, new futuristic cities will be built in the desert along the Red Sea, oriented around tech and digital services. And the kingdom, which has piled billions into tech start-ups like Uber and investment vehicles such as SoftBank’s Vision Fund, would spend more.

That drew Silicon Valley’s attention. When Prince Mohammed visited California in 2018, Sergey Brin, Google’s co-founder, escorted him through a tree-lined path at the company’s campus. Tim Cook, Apple’s chief executive, showed him the company’s products. The prince also traveled to Seattle, where he met with Bill Gates of Microsoft; Satya Nadella, the company’s chief executive; and Jeff Bezos of Amazon.

AI development depends on two key things that Saudi Arabia has in abundance: money and energy. The kingdom is pouring oil profits into buying semiconductors, building supercomputers, attracting talent and constructing data centers powered by its plentiful electricity. The bet is that Saudi Arabia will eventually export A.I. computing muscle.

Adam Satariano and Paul Mozur are tech correspondents The New York Times