State-owned oil giant Saudi Aramco and Google parent Alphabet, two of the world’s biggest companies, are in talks about jointly building a large technology hub inside the kingdom, said a report citing people familiar with the potential deal.
As part of the potential joint venture, Alphabet would help Aramco, build data centers around Saudi Arabia, the people said. It isn’t clear specifically whose data the centers would house or who would control them.
Senior executives at Aramco and Alphabet have been in talks for months on the potential joint venture, sources said.
The talks have included Alphabet Chief Executive Larry Page and have been encouraged by Crown Prince Mohammed bin Salman, who is enamoured with Silicon Valley and wants to bring more tech expertise to the kingdom.
Prince Mohammed has been leading the kingdom’s plan to take Aramco public.
Still, there are many details to work out, and it is unclear when—or whether—such a deal will be finalized.
The size of the potential joint venture is unclear, although it could be big enough to become listed on Saudi Arabia’s stock exchange.
An alliance would help bolster the development of the technology sector in Saudi Arabia, a goal Prince Mohammed has pointed to as a key part of his plan, known as Vision 2030, to wean the kingdom off its reliance on oil.
Alphabet’s Google is chasing both Amazon.com Inc. and Microsoft Corp. in the business of renting computing power and storage online, and a joint venture with Aramco would give it a key foothold in Saudi Arabia as it rushes to develop its tech sector.
None of the three companies have massive data-center complexes, known as “regions” in industry parlance, in the area, though Amazon has plans to open one in Bahrain and Microsoft has announced it will open two data-center operations in South Africa this year.
Amazon is also close to finalizing a $1 billion deal to build three data centers in Saudi Arabia, people familiar with that deal said. The deal is expected to be announced during a trip to the US by Prince Mohammed early this year.
A data-center region in Saudi Arabia could potentially help Google win business from oil-industry customers that are looking to shift their computing operations to the cloud. The costs for such centers can run into the hundreds of millions of dollars, said sources.
Most data for the Middle East is piped from Europe, slowing surfing to the most-trafficked websites, which are accessed via long-distance undersea cables, according to a person familiar with the Alphabet-Aramco talks.
Local data servers—which would store content but also cached memory of personal-navigation data or social-media content—would speed up access and help the country be more competitive in the digital economy.