Amazon and Apple Discussing Possible Saudi Arabia Operation

Amazon and Apple are discussing licensing with Riyadh on investing in the Gulf Coast kingdom of Saudi Arabia, said a pair of sources. This is part of the push by Crown Prince Mohammed bin Salman to give the kingdom a look of high-tech.

Another source confirmed Apple was in discussions with SAGIA, the foreign investment authority of Saudi Arabia. However, both Amazon and Apple already are selling their products in the kingdom through third parties but they along with other worldwide tech giants do not have any direct presence.

Amazon’s talks are led by Amazon Web Services (AWS) its cloud computing segment, which would bring stiff competition to a market that currently is dominated by Mobily and STC two local, smaller providers.

Riyadh has eased its regulatory impediments over the past two years that have included limiting foreign ownership that has long kept most investors away. This was prompted by the drop in prices of crude that highlighted the need the kingdom had to diversity its economy that was so oil dependent.

Attracting players like Amazon and Apple would further the reform plans of the Crown Prince and raise the profile of the two companies in a relatively affluent and young market, which already can boast of the highest smartphone and internet use worldwide.

About 70% of the population of Saudi Arabia is less than 30 and is frequently on social media.

An agreement involving licensing for Apple stores with Saudi’s SAGIA is expected to be signed by February, with the first retail store set up by 2019, said the pair of sources.

The talks with Amazon are in their earlier stages and there has been no date set for its possible investment plans.

Apple has second place already in the mobile phone market in Saudi Arabia behind just Samsung, according to Euromonitor the market researcher.

Amazon acquired online Dubai based retailer Souq.com in early 2017 opening an access point for retail goods from Amazon to be sold across the kingdom.

Both Apple and Amazon did not comment when contacted, while SAGIA was unavailable to make a comment.

While the reform plans in Saudi call for attracting foreign investment, officials have courted players in Silicon Valley especially strong during the last two years to complement their ambitions for high-tech.

Prince Mohammed is a technophile. During a U.S. official visit in 2016 the Crown Prince visited with executives at Uber, Microsoft, and Facebook. The sovereign wealth fund he is the chair of took a stake of $3.5 billion with Uber.

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