Crown Prince Mohammed bin Salman of Saudi Arabia has drawn fresh criticism after his administration announced a $400 million investment in Elon Musk’s AI company, xAI, through Kingdom Holding. The deal comes amid a backdrop of global skepticism toward Saudi investments in technology and concerns over their economic feasibility and ethical implications.
Risky Investments in xAI
The $400 million purchase of shares in xAI is not Saudi Arabia’s first involvement with Musk’s AI venture. The Saudi Public Investment Fund (PIF) previously allocated $375 million to xAI, making the kingdom one of the largest investors in the company. However, xAI has reportedly been facing financial difficulties, leading industry insiders to question the wisdom of such a substantial commitment. Critics argue that the investment is another example of reckless spending by Bin Salman, driven more by personal ambition than sound economic strategy.
A History of Questionable Investments
This latest investment follows a series of high-profile yet controversial financial moves by Bin Salman:
Lucid Motors: The PIF poured $3.8 billion into the American electric vehicle manufacturer, despite the company’s declining sales and mounting losses.
Selfridges: The fund attempted to rescue the struggling British department store by purchasing a significant stake, only to face financial setbacks.
xAI: Despite international hesitation, Saudi Arabia committed heavily to a company struggling to attract other investors due to concerns about its viability and the ethics of Saudi participation.
These investments are part of the Crown Prince’s broader Vision 2030 strategy, which aims to diversify the kingdom’s economy. Yet, many of these projects have failed to generate meaningful returns or improve the socio-economic conditions of Saudi citizens.
Global Concerns Over Saudi Tech Investments
Saudi Arabia’s involvement in technology has raised alarm bells globally. American companies have largely avoided partnerships with Saudi entities due to concerns about human rights abuses and potential misuse of technologies for surveillance. Notably:
Refusal by Anthropic: The AI firm, partially backed by Amazon, rejected Saudi investment offers citing national security and ethical concerns.
Espionage Fears: Reports suggest Saudi Arabia’s partnerships with Israeli cybersecurity firms, such as QuaDream, could enable enhanced domestic surveillance and repression.
Technological Image Washing
Experts argue that these investments serve as “technological image washing,” a strategy to rebuild the Crown Prince’s tarnished reputation. Similar to his ventures in sports and entertainment, Bin Salman’s focus on technology appears to be more about optics than actual economic growth.
Domestic Backlash and Economic Strain
While billions are funneled into speculative investments, Saudi Arabia faces mounting domestic challenges:
Rising Debt: The kingdom’s public debt is projected to reach 1.3 trillion riyals by 2025.
Economic Inequality: Poverty and unemployment remain persistent issues, exacerbated by budget cuts and austerity measures.
Failed Vision 2030 Projects: Flagship initiatives like NEOM and The Line have yet to deliver promised returns, straining public finances further.
The Role of xAI
xAI’s stated mission is to “understand the true nature of the universe,” but critics question how this aligns with Saudi Arabia’s economic and social priorities. The investment raises concerns about whether the kingdom will benefit from any technological breakthroughs or if this is another example of funds being diverted toward impractical pursuits.
What’s Next?
As Saudi Arabia continues to court global tech giants, the Crown Prince’s strategy faces significant hurdles. The refusal of major firms to engage with Saudi investors highlights the kingdom’s challenges in overcoming its international reputation and convincing partners of its long-term vision.
Saudi citizens and global observers alike are questioning the sustainability of Bin Salman’s approach, especially as the kingdom’s economic woes deepen. Critics argue that unless there is a shift toward more transparent and productive investments, Saudi Arabia risks further economic instability.
$400 Million Spent by Saudi Crown Prince Mohammed bin Salman on Elon Musk’s AI Venture Amid Rising Controversy
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