Microsoft and Google expand Saudi offices amid state pressure: Here’s what companies have to say

Global technology giants including, Google parents Alphabet and Microsoft are reportedly among the companies working to ramp up their presence in Saudi Arabia amid pressure from the government, which, according to a report in Bloomberg, has said it will stop giving contracts to companies without regional headquarters in the country. The three US companies are said to have received licenses to establish regional HQs in Riyadh, a government database shows.Those approvals came just ahead of the January 1 deadline set by the Saudi government.
Other companies that have recently received such licenses are Airbus SE, Oracle Corp and Pfizer Inc.
What Microsoft said
Microsoft said in an emailed statement to Bloomberg that Saudi Arabia is part of its CEMA — Central & Eastern Europe, Middle East & Africa — region. “In this very diverse region, we have a number of headquarters including one in Saudi Arabia,” the statement said.
What Google says
Google says it is engaging with the relevant authorities on the requirements. Airbus said its setup in the kingdom is in line with the country’s rules.
Why and what the new rules say
Saudi Arabia announced the new rules for state contracts in February 2021. The government said that it wanted to limit ‘economic leakage’ — a term used by the government for state spending that can benefit companies that don’t have a substantial presence in the country . The Saudi move was widely seen by business and political analysts as an attempt to compete with Dubai. Dubai has long been favored by multinational companies for its lifestyle, low taxation and connectivity.
Most global firms have traditionally managed their Middle East operations from offices in Dubai, and kept smaller offices in Saudi cities including Riyadh or Dammam, close to the headquarters of oil giant Saudi Aramco. It is so far unclear what the Riyadh headquarters would mean for operations elsewhere in the region.