Silicon Valley Comes Knocking in Dubai
Uber is acquiring Careem for $3.1bn. When the deal is sealed, it will be the largest technology sector transaction in the Middle East since Amazon acquired Souq.com in 2017 for $580mn.
By Xische Editorial, March 27, 2019
Given the depth of Silicon Valley’s startup ecosystem, it can seem like technology unicorns only thrive in California. Well, that is certainly not the case. Recent news that San Francisco rail-hailing juggernaut Uber will buy Dubai-based rival Careem shows that the opposite is true. The landmark deal will see Uber acquiring the Dubai ride hailing platform for $3.1bn. When the deal is sealed, it will be the largest technology sector transaction in the Middle East since Amazon’s acquisition of Dubai-based online retailer Souq.com in 2017 for $580mn.
This big news comes as no surprise for those paying close attention to the Middle East technology space, where Dubai’s central role as an incubator and key market has been clear for sometime. Indeed, Omar Al Olama, UAE Minister of State for Artificial Intelligence, tweeted that the acquisition “shows the world that the UAE is where dreams can be dreamt and achieved.” Al Olama’s tweet couldn’t be more true, but let this not diminish the decades of visionary leadership and hard work that have gone into building the UAE into such a fertile environment for technology entrepreneurs.
As Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai, noted on Instagram, “1999, many people questioned our idea to establish Dubai Internet City in the desert. Two years ago, Amazon acquired the multi-billion dirham Souq.com and today, Uber acquired Careem for Dh11 billion. These giant companies flourished from the “desert” of Dubai.”
The strength of the Emirati technology sector is the result of careful government planning, encouragement, and the country’s central position at the heart of an internet savvy region. Let’s unpack each of these ingredients to understand exactly what is driving the UAE’s success.
A relatively young country with nimble leadership eager to capitalise on the talents of its entire population, the UAE has invested substantially in building its knowledge economy. Through various initiatives, it has demonstrated a strong commitment to educating its youth with technology in mind. As a safe, propours country in the virtually untapped Middle Eastern market, the UAE and Dubai in particular is a focal point for the region’s best and brightest. But it doesn’t stop there. Countries throughout the emerging world from Africa to South Asia look to Dubai as a place of tech innovation. If you are running a tech startup in Rwanda or Kazakhstan, for example, chances are that your business has some footprint in Dubai.
With its ability to harness the best talent across a wide variety of geographies, it makes sense that companies like Careem or Souq.com would set up operations in Dubai. The business climate is friendly, the technology infrastructure is world class (and keeps improving), and it is easy to bring in the best of the best from just about any corner of the world. After all, you can fly direct to 90% percent of the globe from Dubai International airport.
The backstory of the rise of the UAE tech ecosystem hinges on the government’s proactive role. When it comes to critical investments into technology, the UAE has chosen to lead by example on the government level. It is a journey which began two decades ago, but has accelerated in recent years. In 2017, the UAE became the first country to appoint a minister of Artificial Intelligence (AI). The appointment coincided with the release of the government’s official strategy outlining the country’s intent to use AI in everything from water management to education. The announcement followed closely on the heels of the launch of the Dubai Blockchain Strategy in 2016 to move all applicable government transactions to the blockchain within the next three years. Under the program, the government of Dubai has already seen a 56% reduction in paperwork in the past six months. Beginning in 2015 in Dubai, the UAE has undertaken an ambitious data initiative to streamline access to data for residents, businesses and government entities to facilitate service delivery and tap into insights from data for business growth.
Given the country’s global status and the wide array of nationalities passing through or living in the country, the UAE wants to be a global focal point for emerging technologies; a place where humanity can see the future play out in the present. The Smart Dubai initiative supports hackathons, accelerators and educational opportunities to grow the technology ecosystem. Dubai Future Accelerators issues yearly challenges to the city’s tech community to scale use-cases for new technology such as AI, robotics and blockchain. Other government-affiliated ecosystem influences such as the DIFC Fintech Hive and Dubai Chamber also run accelerator programs to attract international talent to develop and scale innovative products and services from Dubai.
Leading by example on the government level is a major reason why the likes of Careem and Souq.com have been able to find their footing in Dubai and flourish. Major acquisitions will certainly accelerate the growth of the country’s sector. While the acquisition of Souq.com might have heralded Dubai’s arrival on the global technology scene, the sale of Careem reveals how the sector has matured. The UAE, it is safe to say, is now a world leader in technology innovation. We can expect more incredible developments as it really spreads its wings.