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Apple, Amazon in talks to set up in Saudi Arabia

Saudi Arabia, December 30, 2017

Apple and Amazon are in licensing discussions with Riyadh on investing in Saudi Arabia, two sources told Reuters, part of Crown Prince Mohammed bin Salman’s push to give the conservative kingdom a high-tech look.

A third source confirmed that Apple was in talks with SAGIA, Saudi Arabia’s foreign investment authority.

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.

Amazon’s discussions are being led by cloud computing division Amazon Web Services, 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.

Luring Apple and Amazon would further Prince Mohammed’s reform plans and raise the companies’ profile in a young and relatively affluent market, which already boasts some of the highest internet and smartphone use in the world.

A licensing agreement for Apple stores with SAGIA is expected by February, with an initial retail store targeted for 2019, said two sources familiar with the discussions.

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

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

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

While Saudi reform plans call for luring foreign investment broadly across sectors, officials have courted Silicon Valley players especially strongly over the past two years to complement their high-tech ambitions. Prince Mohammed is an avowed technophile and has styled himself a disrupter in the model of Steve Jobs, Mark Zuckerberg and Bill Gates.

During an official visit to the US last year he met executives at Facebook, Microsoft and Uber, in which the sovereign wealth fund he chairs later took a $3.5 billion stake.

Since then, he has also set up a $45 billion technology investment fund with Japan’s SoftBank and announced plans to create a futuristic $500 billion 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.

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