What The Hell America!

Chinese cloud companies are quietly gaining momentum in the battle with their U.S. counterparts for the Middle East’s digital infrastructure.

Amazon, Microsoft, Google, and Oracle spent years building regional tech ecosystems with data centers across the Gulf. In recent years, however, Huawei and Alibaba have outmaneuvered them by aligning more closely with local government priorities. Besides offering competitive pricing, Chinese cloud giants have entered into strategic partnerships and tailored their solutions to address specific security and sovereignty concerns.

“Chinese providers are investing in infrastructure and skills development and expanding technology partnerships, gradually gaining market traction in the cloud space,” Manish Ranjan, software and cloud research director for Europe, the Middle East, and Africa at market research company IDC, told Rest of World. “Despite the established dominance of AWS [Amazon Web Services], Azure, and Google Cloud in the Middle East, Chinese providers like Huawei and Alibaba are making a significant presence in the region.”

U.S. cloud providers established their presence in the Middle East early, with Amazon Web Services opening its first regional data center in Bahrain in 2019, followed by a data center in the United Arab Emirates in 2022. Microsoft started its first Middle Eastern cloud regions in Abu Dhabi and Dubai in June 2019, and Google Cloud entered Saudi Arabia’s Dammam region in 2023.

Oracle has two cloud regions in the UAE and two in Saudi Arabia, with plans for a third in Neom, a planned project set to transform the Red Sea coast of northwest Saudi Arabia into a futuristic city.

Despite this established footprint, Chinese cloud providers such as Huawei formed strong partnerships with regional telecommunications companies including STC, E& Enterprise, du, Zain, OmanTel, and Ooredoo, driving developments in cloud, artificial intelligence, 5G, and smart city technologies, Ranjan said. The Chinese companies had begun forming local partnerships since 2016. 

“At Huawei Cloud, we are committed to enabling businesses across Saudi Arabia to thrive in the digital economy by providing world-class cloud technologies,” Alan Qi, president of Huawei Cloud, Middle East and Central Asia, said during the 2025 Mobile World Congress in Barcelona in March. “This partnership with Zain strengthens our ability to support organizations with scalable, secure, and intelligent cloud solutions.” Huawei did not respond to a request for comment from Rest of World.

Saudi Arabia is currently executing a cloud-first policy that mandates government offices to use internet-based computer services before buying their own equipment for new projects. Huawei has established four cloud facilities, including a data center in Saudi Arabia with ultralow latency capabilities, which allows information to travel between computers with almost no delay.

Last month, the company announced a partnership with telecom firm Zain KSA to upgrade its networks in Saudi Arabia. In just two years, Huawei Cloud’s Riyadh hub has onboarded more than 1,000 customers, including Saudi government agencies and major financial institutions, according to Huawei.

In February, during one of the biggest tech events in the region, Tencent announced its entry into the Middle East’s cloud business. The company said it will invest more than $150 million in the kingdom over the next few years.

Similarly, Alibaba Cloud expanded strategically by opening data centers in the UAE in 2022 and Saudi Arabia last year. It entered the Saudi market by setting up a venture with STC. The Saudi Cloud Computing Company will support the kingdom’s Vision 2030 goals, under which the government hopes to diversify the economy away from oil dependency.

“They have also formed strategic partnerships with government entities in the region, especially in Saudi Arabia, to ensure compliance with local data laws,” Ranjan said, noting how Chinese providers have turned regulatory requirements into competitive advantages.

A key differentiator has been the Chinese providers’ approach to artificial intelligence. While U.S. companies have been slow to adopt AI solutions in the region, Chinese providers have aggressively embedded AI into their offerings at a time when Gulf nations are pursuing AI leadership.

During the Huawei Global AI Summit last year, Huawei Cloud’s chief technology officer, Bruno Zhang, showed how its AI could cut Saudi hospital diagnostic times by 40% using localized Arabic language models — a tangible benefit that theoretical AI platforms from Western providers couldn’t match.

The rise of Chinese cloud providers in the Middle East has been bolstered by China’s Digital Silk Road initiative, which provides diplomatic cover and positions these companies as trusted digital transformation partners. While U.S. companies face increased scrutiny over data governance concerns, Chinese firms benefit from high-level agreements that streamline their market entry and operations.

For Middle Eastern CIOs, Chinese cloud providers offer support and a better understanding of regional business contexts, making them increasingly attractive options for achieving data sovereignty, cost optimization, and vendor diversification. Chinese vendors offer bundled deals, which are significant factors in total cost of ownership calculations, Ranjan said.

Even with the shift to cloud over the past few years, there are still certain types of workload or industry-specific activities that are best and cheapest to run in a more traditional data center, according to Kenneth Lindegaard, CIO at UAE-based AI-powered space technology company Space42. The hybrid approach plays directly to the strengths of Chinese providers, who recognized this market preference early and built their regional strategy around it.

“The cloud market is very competitive, and there are many players,” Lindegaard told Rest of World. “Regulations like data localization, etc., are risky because there might not be a business case for all of them to build cloud data centers in all countries in the region.”

The battle for cloud dominance in the region illustrates a broader truth about emerging technology markets: Having the best technology isn’t enough. Winning requires aligning with national priorities — a reality Chinese cloud providers have embraced, even as their U.S. counterparts focus on technological superiority.

“The Chinese companies are showing that success in the Middle East depends as much on trust and cooperation as it does on computing power,” Luis Bravo, senior research analyst at Texas-based data center Hawk, told Rest of World.