Whitepaper Commissioned By Aws

Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 1 Unlocking the Full Potential of AI in the Middle East How Can AI Accelerate the Growth of the Region’s Digital Economy? An IDC Whitepaper November, 2024 Commissioned by: Research by: Melih Murat Associate Research Director Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 2 3 The Path to Achieving National AI Competitiveness and Independence The global pursuit of a competitive AI ecosystem has become a priority for nations worldwide, and with good reason. Across the board, technology serves as the primary catalyst for economic growth, social advancement, and environmental sustainability. As countries vie to position themselves at the forefront of AI innovation, they recognize that mastery of this technology is essential to securing a prosperous and sustainable future. Figure 1 below highlights key AI-related national initiatives across the Middle East. These initiatives have sparked a significant transformation across the region, evolving the countries from mere consumers of technology into active producers and innovators within the global technology landscape. Figure 1: National Initiatives to Drive AI Competitiveness and Independence in the Middle East National AI Strategies & Initiatives AI-focused ministries, authorities, councils, collaboration platforms, and national AI strategies Source: IDC and various online sources Public Sector Adoption Promoting AI adoption within public-sector organizations AI Compute, Chipset Investments Hundreds of millions of U.S. dollars invested in accelerator chipsets across public and private sectors In-Country Cloud Datacenters Encouraging and facilitating cloud datacenter investments by local providers and hyperscalers Indigenous AI Firms and Ecosystem Building an AI ecosystem by scaling up indigenous AI providers and launching accelerator programs for AI startups Education System The introduction of AI-focused universities and the enhancement of undergraduate and graduate curriculums in existing universities AI R&D Driven by universities, local AI firms, and research institutes, with support from government authorities and in partnership with global technology companies Balanced Regulatory Approach Introduction of guidelines, policies, and toolkits; ongoing efforts to establish AI-centric regulations that strike the right balance between innovation, security, and privacy AI Talent Hub Providing AI education and training for citizens, and across the public and private sectors; attracting global AI talents Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 4 5 To gain insights into the trends surrounding private- and public-sector organizations’ perceptions and initiatives related to AI, AWS and IDC conducted an AI-focused survey in Saudi Arabia and the United Arab Emirates (UAE) involving 166 organizations across various industries, including hospitality and accommodation, financial services, government, media, entertainment, gaming, and retail and wholesale. This study primarily focuses on the UAE and Saudi Arabia and it serves as a valuable proxy for other technology-driven countries in the region. The key highlights of the study are as follows: IDC also utilized other readily available market studies, where appropriate, to provide a comprehensive view of the trends. Figures 2a and 2b below offers insights into the government-led initiatives that are deemed important by public- and private-sector organizations in the UAE and Saudi Arabia. Perspectives on national AI initiatives and expectations from government authorities AI use case adoption priorities and measures for monitoring AI’s business impact AI readiness and maturity of public- and private-sector organizations Limitations for AI adoption at scale Partnership strategies in the AI adoption journey Spending areas across the AI value chain Investment trends in AI technology platforms and AI-ready IT infrastructures Approach to responsible AI Figure 2a: Awareness of Important and Impactful Government-Led AI Initiatives Avoiding Overregulation of AI Market Strikes the Right Balance Between Compliance and Innovation Q: What important and impactful government-led initiatives are you aware of that could drive your country’s competitiveness in the field of AI? Country View National AI regulations 73%76% AI skills training programs 60%70% Developing AI start-up and scale-up ecosystems

Industry-specific guidelines, policies, and regulations

Encouraging more in-country investments from global cloud providers

Research and development grants 29%37% UAE KSA Source: AWS AI Readiness Survey for Saudi Arabia and UAE (Sample size: 166), August 2024 Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 6 7 Several important observations concerning some of the key trends are summarized below. National AI Regulations The majority of organizations emphasized the need for a regulatory framework to guide AI use case adoption across both critical and non-critical workloads, providing clarity for technology suppliers and IT buyers on how to address uncertainties surrounding mission-critical AI use cases and sensitive data, particularly considering regional and cultural nuances. They also stress the importance of avoiding overregulation, which could stifle innovation. Strict data residency requirements, for example, may limit organizations’ access to advanced public cloud-based AI technologies offered through global cloud datacenters, reducing a country’s global competitiveness. These challenges should be addressed through public consultations to ensure government authorities understand the expectations of both technology suppliers and buyers. Authorities should also engage with commercial public cloud providers to determine how and when these AI services can be offered through local datacenters, while also establishing a process to utilize global cloud datacenters until local services become available. Skills Training Programs Governments in the Middle East (e.g., Saudi Arabia, UAE, Qatar), in collaboration with universities, technology providers, and the private sector, have taken proactive steps to build national AI competencies among citizens, the public sector, and industries. 70% of organizations in the kingdom specifically highlight the importance of skills development initiatives to bridge the talent gap. Industry-Specific Guidelines, Policies, and Regulations While over half of the organizations in the UAE and in Saudi Arabia emphasized the importance of industry-specific regulations, it is crucial that industry authorities collaborate closely with national government bodies to ensure alignment between national regulations and those specific to the industry, particularly in areas directly or indirectly related to different type of AI use cases. Developing AI Start-Up and Scale-Up Ecosystems In recent years, the region has witnessed a surge in indigenous technology companies making a global impact. The survey underscores this as a vital initiative, contributing to a more comprehensive technology ecosystem. A notable example is the Falcon Foundation Model Family, developed by the Technology Innovation Institute in the UAE, which has emerged as a global success story and one of many locally developed technology solutions by regional companies. Bolstering Local Datacenter’s Cloud Offering It is important for regional authorities to encourage global cloud providers to offer AI platform and infrastructure services via local public cloud datacenters. Without cloud-based GPU and CPU compute resources, as well as data and AI platforms, AI innovation is impossible. Some countries, such as the UAE, Saudi Arabia, and Qatar, have made significant progress in this area by facilitating the development and launch of commercial public cloud datacenters (e.g., AWS), with more initiatives on the horizon across the region. Source: AWS AI Readiness Survey for Saudi Arabia and UAE, August 2024 (N = 166) Industry View National AI regulations 78% 80%73%75% 63% AI Skills training programs 58% 63%70%75% 54% Developing AI start-up and scale-up ecosystems

Industry-specific guidelines, policies, and regulations

Encouraging in-country investments from global cloud providers

Research and development grants

Hospitality & Accommodation Finance Government Media & Entertainment, Gaming Retail & Wholesale Figure 2b: Awareness of Important and Impactful Government-Led AI Initiatives Avoiding Overregulation of AI Market Strikes the Right Balance Between Compliance and Innovation Q: What important and impactful government-led initiatives are you aware of that could drive your country’s competitiveness in the field of AI? Whitepaper, Commissioned by: AWS November, 2024 | #META49970122 Whitepaper, Commissioned by: AWS November, 2024 | #META49970122