April 4th, 2024 Legal Updates

The Kingdom of Saudi Arabia Accelerates AI Investment with $40 Billion Fund

In a bold move reflecting its role as “market maker” and leader in the development, and deployment, of artificial intelligence (“AI”), the Kingdom of Saudi Arabia (“Saudi Arabia“) plans to create a US$40 billion fund in cooperation with other investors, including American venture capital firm Andreessen Horowitz, to invest in the AI sector.

This significant investment adds to Saudi Arabia’s established determination to position itself at the forefront of the global AI landscape, marking a pivotal moment in its economic diversification efforts.  Exclusive of this new fund, Saudi Arabia’s Public Investment Fund (PIF) has been particularly active, embarking on a buying spree to acquire assets across various sectors as part of its strategy to reduce dependence on oil revenues. These efforts supplement Saudi’s efforts to diversify revenue streams away from oil, a key pillar of Crown Prince Mohammed bin Salman’s “Vision 2030” initiative.

Saudi Arabia has also established the Saudi Company for Artificial Intelligence (SCAI), a state-owned enterprise aimed at accelerating the commercialization of AI technologies. In addition, Saudi Arabia has entered into collaborations with entities like Huawei to foster the development of AI solutions across sectors such as healthcare, transportation, and energy.

From a regulatory perspective, the Saudi Data and Artificial Intelligence Authority (“SDAIA“) is spearheading Saudi Arabia’s ambitious AI strategy via the National Strategy for Data & AI. SDAIA’s aim, inter alia, is to balance the development and deployment of AI in a responsible manner, balancing the interests of industry with individual rights and reasonable government regulation. 

One of the key priorities outlined by SDAIA is to accelerate the adoption of AI across priority sectors such as healthcare, government, education, energy, and mobility, where transformative applications have the potential to revolutionize service delivery and improve quality of life. Through targeted investments in research infrastructure, skills development programs, and strategic partnerships with leading international institutions, Saudi Arabia aims to nurture a conducive environment for innovation.

SDAIA has also introduced various programs (e.g., the National Center for AI), dedicated to advancing research and development in fields such as natural language processing, computer vision, and robotics.  SDAIA aims to position Saudi Arabia as a global leader in artificial intelligence among various stakeholders through collaborative efforts and creating an ecosystem that fosters public-private partnerships in the AI space.

Experts and observers alike believe that the influx of AI investments could have far-reaching implications, not only for Saudi Arabia, but for the broader Middle East region. Through the development of a knowledge-based economy driven by innovation and digital transformation, these investments have the potential to drive sustainable economic growth, create high-value jobs, and enhance global competitiveness.

Saudi Arabia’s investment in AI research, talent development, and ecosystem building, is laying the foundation for a prosperous and sustainable future driven by cutting-edge technologies. As the world watches closely, Saudi Arabia’s bold initiative stands as a testament to its determination to seize the opportunities of the digital age.

Authors: Feras Gadamsi, Partner, Head of Data and Technology Practice and Salma Farouq, Associate