Can the Gulf Achieve Success in Its Pursuit of AI Development?

Welcome to TechScape! In today’s tech landscape, we’ll be examining how Persian Gulf nations are vying for greater autonomy over their artificial intelligence initiatives amid a turbulent United States. We’ll also touch upon the astonishing $600 billion that U.S. tech behemoths are projected to spend this year.

Can the Persian Gulf states capture some of the US’s tech dominance for themselves?

Last week, I had the opportunity to attend the Web Summit in Doha, Qatar—a dynamic new iteration of the globally recognized tech conference series. A prominent theme resonating throughout the various speeches and discussions was the concept of sovereignty.

On the opening night, Paddy Cosgrave, the founder of the Summit, underscored this notion: “Three years ago, when Web Summit Qatar was launched, discussions were centered on entering a multi-polar world. Today, we are genuinely living in that reality.”

He mentioned a striking rebuke delivered by Canadian Prime Minister Mark Carney to former U.S. President Donald Trump at Davos not long ago, serving as a testament to this multi-polar shift. Cosgrave also highlighted cutting-edge dancing robots from a Chinese company as a symbol of technological advancement. Adding to the dynamic atmosphere, the Qatari Prime Minister introduced numerous billion-dollar initiatives aimed at cultivating local startups. Following him, the founder of insurgent TikTok competitor UpScrolled shared impressive statistics that saw their app reach 2.5 million users despite ongoing controversies surrounding TikTok’s U.S. operations.

As the U.S. increasingly becomes an uncertain destination for migration and entrepreneurial ventures, major Gulf states are demonstrating their commitment to establishing themselves in the AI sector. It’s not solely Qatar leading the charge—last year, the UAE forged a partnership with the U.S. for advanced chips designated for one of the largest data centers to be constructed outside of Abu Dhabi. Additionally, Saudi Arabia’s state-owned AI firm, Humain, has embarked on numerous multi-billion-dollar contracts to build a “full-stack AI ecosystem,” aiming to develop its own data centers, training datasets, cloud services, and perhaps even homegrown chips. Their pursuit of sovereign AI—where artificial intelligence is fully controlled by the nation—is clear.

Importantly, this movement towards enhanced AI capabilities does not signify a severance of ties with the United States. During my time in Doha, a newspaper backed by members of Qatar’s ruling al-Thani family celebrated a collaboration between Jared Kushner’s AI venture, Brain Co, and Qatar’s Ministry of Municipality aimed at automating construction permitting processes. The article’s opening line captures the pressing nature of this partnership: “Qatar is emerging as a pivotal player in practical artificial intelligence implementation, utilizing alliances that merge Silicon Valley expertise with indigenous knowledge.”

The pivotal question emerges: can the Gulf’s concerted effort to develop its own AI succeed? This inquiry was at the forefront of many discussions at the conference. The immediate concern followed the question: “Is AI a bubble?” Several substantial challenges confront the region in its quest for sovereign AI. Access to semiconductor chips remains limited, though progress is being made through various means. Moreover, there exists a shortage of engineering talent in the region needed for a robust AI sector. However, Doha offers Indian engineers a time zone conducive to family connections, along with a lower cost of living compared to the steep expenses associated with obtaining a U.S. work visa.

In terms of AI model development, the Arabic internet is disproportionately deficient in textual content compared to its English counterpart.

Venture capitalists are scrutinizing investment opportunities amid these shifting dynamics. During one panel I moderated, differing perspectives emerged. A French investor advocated for increased investment in startups across Europe and the Middle East, while a German counterpart voiced concerns about elevated valuations in the U.S., making it challenging for investors to acquire substantial ownership stakes. In contrast, a venture capital partner focused solely on San Francisco firms expressed confidence in Silicon Valley’s stronghold that positions these companies as seemingly unbeatable.

The Gulf nations are not alone in their ambition to cultivate a thriving tech ecosystem; Europe mirrors similar aspirations for autonomy spurred, in part, by Trump’s contentious relationship with the continent. However, Europe faces significant hurdles, including stringent tech regulations that, while offering superior privacy protections, impede the growth of a competitive tech sector in contrast to the more laissez-faire U.S. landscape. The EU might need to weigh potential sacrifices in privacy due to the proposed AI Act against the deregulation demanded by industry players.

Unlike the cash-rich Gulf states, European countries are investing significantly less in technology. This begs the question: can European entities successfully establish necessary tech tools without substantial financial backing? For example, France recently abandoned platforms like Zoom and Microsoft Teams in favor of a domestic alternative, Visio, despite the existing software sharing the same name as one of Microsoft’s products. Meanwhile, Belgium and the Netherlands continue to play crucial roles in the global semiconductor supply chain, albeit only as partial players. Additionally, Elon Musk’s Starlink casts a long shadow over initiatives aimed at bolstering homegrown alternatives like Eutelsat, which face a steep mountain of challenges.

Interestingly, one success story emerging from the Web Summit was ElevenLabs, a London startup leading the charge in generating AI-based voice and music technologies. The Polish founder of the company announced a remarkable $500 million fundraising round, backed by prominent American firms including the Andreessen Horowitz, further tripling ElevenLabs’ valuation.

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$600bn+ in one year: tech giants’ staggering spending on AI keeps growing

In recent weeks, key players like Alphabet/Google, Amazon, Microsoft, and Meta have all disclosed their intentions to allocate more than $600 billion over the next year, primarily focusing on the infrastructure that supports AI. To put this into perspective, the amount exceeds the total annual expenditures of many nations around the globe. Capital expenditure figures for each of these companies for the upcoming year are approaching or even exceeding the totals from the past two years combined. In 2023, the four giants collectively spent $359 billion, while in 2024, their expenditure was approximately $217 billion, according to reports from Bloomberg.

Alphabet announced plans to invest between $175 billion and $185 billion in this time frame—a substantial increase compared to last year. Meta projected spending of between $115 billion and $125 billion, while Microsoft indicated it would invest around $105 billion, as per Bloomberg’s estimates.

Among these companies, Amazon has attracted attention for projecting the largest spike in capital expenditure, expecting to leap from $125 billion last year to $200 billion in 2026. Strikingly, just a day ahead of Amazon’s earnings announcement, Jeff Bezos’s Washington Post laid off a third of its workforce. While these two entities are not directly linked, the disparity in scale is noteworthy; Bezos acquired the Post in 2013 for only $250 million, an amount that stands in stark contrast to Amazon’s yearly expenditure.

Even Tesla, which engages with AI from a different angle than the others, revised its expectations upward to $20 billion in capital expenditures, surpassing analysts’ forecasts, particularly in light of the company’s declining revenue.

Despite the immense scale of these investments, there are indications that these figures may escalate even further. Recent ads aired during the Super Bowl attempted to promote AI products and reassure consumers of their benefits. The AI marketplace remains volatile, not having yet cemented itself with established leaders, indicating that the tech giants are eager to secure as significant a share as possible.

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