Amazon confirms acquisition of Souq, marking its move into the Middle East

Comment

Image Credits:

Amazon today confirmed that it has acquired Souq.com, an e-commerce marketplace serving the Middle East based out of Dubai, which was already commonly described as “the Amazon of the Middle East.” We had reported last week that the companies had already reached an agreement and that “the ink [was] dry” on a deal that was valued at around $650 million. Amazon today did not disclose the price in a short statement announcing the deal, although we are confident of our sources on the price we reported.

The announcement caps off several months of speculation about the fate of Souq. The company had originally been in talks with Amazon to acquire a 30 percent stake that would have valued that company at $1 billion, before entering into negotiations for an outright sale. Others reportedly interested in the company included eBay and Emirati retail group Majid Al Futtaim.

In the last couple of days, Bloomberg also reported that Mohamed Alabbar — whose firm owns The Dubai Mall and the Burj Khalifa; a stake in logistics company Aramex; and is trying to get its own rival site Noon.com off the ground — was also interested in the company. However, it sounds like this was little more than smoke and mirrors, and perhaps a late realisation that it’s actually super hard to get a marketplace off the ground. Our sources had told us the deal had already been done between Amazon and Souq.

Amazon’s acquisition of Souq marks the company’s first move into serving the Middle East region, which covers a total of some 50 million consumers across several countries, as well as a relatively untapped market: only about two percent of all retail spend today is made online, according to a report from McKinsey.

Souq gives Amazon an immediate leg up rather than building a new service from the ground up: the company includes both a payments and fulfilment infrastructure, along with a marketplace that already has some 4 million products and works with thousands of merchants to help sell their goods online.

Amazon and SOUQ.com share the same DNA – we’re both driven by customers, invention, and long-term thinking,” said Russ Grandinetti, Amazon Senior Vice President, International Consumer, in a statement. “SOUQ.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We’re looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we’ll work hard to provide the best possible service for millions of customers in the Middle East.”

Amazon is treating this as a bolt-on acquisition, bringing on management and other teams, along with the existing Souq.com business.

“We are guided by many of the same principles as Amazon, and this acquisition is a critical next step in growing our e-commerce presence on behalf of customers across the region,” aded SOUQ.com CEO and Co-Founder Ronaldo Mouchawar. “By becoming part of the Amazon family, we’ll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon’s great track record of empowering sellers.”

The deal represents an interesting, if possibly predictable, landing for Souq, which was originally founded in 2005 but became what we know it as today in 2009 when Yahoo acquired an internet portal founded by Mouchawar called Maktoob, but was not interested in the its existing e-commerce business.

Souq was valued at around $1 billion in its last funding round, so a $650 million price tag is most certainly a step down from this. However, it still represents a return for investors, who collectively put some $425 million into the company. Those investors included Ballie Gifford, IFC Venture Capital Group, Jabbar Internet Group, MENA Venture Investments, Naspers, Standard Chartered Bank and Tiger Global Management.

In the years between 2009 and now, Souq has been the largest of a handful of companies to tap into a growing class of consumers who are turning to the Internet and their mobile devices to buy goods and services. Other existing companies include Wadi, which last year raised $67 million, and Rocket Internet-backed Namshi.

The acquisition of Souq is the latest move from Amazon to expand in the general region. Up to now, many of its moves in neighboring markets have been organic — that is, Amazon building its international operations from the ground up rather than through acquisitions.

Chief among them is India, where the company has invested billions to build out its business in the country. Just as Amazon’s move to buy Souq is made in part while keeping an eye out for competition in the Middle East, it’s also up against would-be clones and rivals in these other markets. In India, the main competition comes in the form of two businesses, Flipkart and Snapdeal — which are reportedly now talking about a merger, partly it seems in response to the billions that Amazon is investing in its business there. Flipkart is also being linked with the acquisition of eBay India, although eBay has declined to comment on rumor and speculation when contacted for a comment.

One question now is whether this move is a one-off or whether Amazon is showing us that it now has the appetite to digest more regional giants, which are patiently waiting in the wings for what comes next.

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo