December 28, 2017 / 9:25 PM / 5 months ago

Breakingviews - Apple and Saudi test out their comfort zones

NEW YORK (Reuters Breakingviews) - Apple and Saudi Arabia’s partnership may test out their comfort zones. The country’s large population and income make it logical that the smartphone giant is in talks to open a shop, as Reuters reported on Thursday. Enticing a cutting-edge global tech firm would also gloss Crown Prince Mohammed bin Salman’s modernizing campaign. There are risks for both; Saudi’s gamble may be bigger.

A Saudi woman speaks on the phone in Riyadh, Saudi Arabia October 2, 2017. REUTERS/Faisal Al Nasser

It’s easy to see the appeal for Apple. Saudi Arabia has 33 million people, about 60 percent of whom are under 35. It’s also relatively rich, albeit with huge wealth disparities. Apple already has stores in Australia, Belgium, Netherlands and Taiwan – countries with fewer people and less per capita income. A store could help the company tap deeper into this attractive market.

As for the crown prince, he wants Saudi Arabia to achieve better economic growth and less dependence on oil – both to legitimize his de facto rule and face down the existential threat to the petro-state from green energy. Image matters in politics, and having Apple in the country, and perhaps more of its gadgets in young people’s pockets, would provide a shiny, daily reminder of the benefits of reform.

There are risks. True, the products Apple sells don’t obviously help governments oppress their people. But an association with a country where women are second-class citizens and same-sex relations are illegal could damage the reputation of the Silicon Valley firm and Chief Executive Tim Cook, and make talk of championing diversity look hypocritical.

As for Saudi, welcoming Western tech firms could effectively loosen the leash. History is full of authoritarian rulers facing crises when incremental reform gives the population a taste for more, as the Soviet Union and China found in the 1980s. The Arab spring occurred when social media blossomed. Apple has consistently championed user privacy, and encrypted apps on iPhones allow Saudi people more ability to speak and meet freely.

Such concerns may seem remote – the first Apple Store may not even open until 2019. For now Saudi’s rulers are probably more interested in the symbolism. An endorsement from Silicon Valley would burnish their efforts today, even if it potentially undermines their authority tomorrow.

Breakingviews

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