Since the beginning of October, following months of rumors, three AI giants-Anthropic, OpenAI, and SpaceX-have announced that they are entering Israel, either directly or through partnerships with local firms.
These companies, which up to now have provided Israelis with remote access to their systems via monthly usage licenses, are now taking their first concrete steps in Israel. They aim to capture the budgets of banks, health funds, government ministries, and the defense establishment, as well as to compete in the crowded high-tech sector. Pressure from investors to boost sales ahead of or in the course of an IPO, coupled with intense competition, is driving these AI giants to establish a physical presence on the ground in Israel.
OpenAI: Two Israeli executives
Sam Altman’s OpenAI has announced that it is establishing a direct presence in Israel, appointing its own personnel rather than relying on intermediaries. Since the beginning of October, the company has hired two senior executives tasked with promoting its products in Israel: Motti Hadas, a former senior executive at Matrix, and Ido Perlson, who previously managed sales for Amazon Web Services (AWS) to Israeli startups, and later founded and sold a startup to Amdocs.
OpenAI’s operations in Israel are expected to follow this same model: local representatives with deep knowledge of the domestic industry will report directly to the company’s UK-based division, bypassing the need for a dedicated Israeli regional manager. "Motti and Ido will be capable of identifying relatively large companies willing to take a chance and invest significant capital in OpenAI, starting on a small scale and then growing alongside them," says a senior figure in Israel’s IT sector, who requested anonymity. "Both are experts in data and are familiar with a wide variety of organizations, not just high-tech companies, that have rapidly implemented cutting-edge technology through significant investment. They will curate an 'A-list' of the first 100 major, high-growth clients that will build their activity with OpenAI in Israel.".
Directly hiring employees in Israel is merely the first step in OpenAI’s expansion in the country. For several months, the company has been active in Israel through a partnership with CloudZone, an Israeli information systems firm and the cloud division of Matrix, via its international Select Partner program. It has also established partnerships with other Israeli companies, such as Abra and AllCloud.
Anthropic: Three partners
On Sunday, CloudZone also announced a partnership with Anthropic, which is likewise entering the Israeli market, with the support of three local partners. In addition to CloudZone, the network includes Israeli firms Abra and AllCloud, all three of which had to meet rigorous criteria to satisfy the requirements set by the AI giant. "Israeli partners of foreign companies are accustomed to the lengthy courtship processes these firms typically conduct in Israel, but that was not the case here," says Ori Tabachnik, VP of Global Sales at CloudZone.
"Anthropic published a call for partners and conducted a rigorous selection process. We had all our employees undergo certification, certifications that are valid for only six months, which is unprecedented in the industry. In other words, as you implement code, you are required to retake Anthropic’s exam every six months. They demanded proof of capabilities, a list of current and prospective clients, and ultimately opened the door only to the fastest-growing players."
CloudZone came to Anthropic after years of representing all the major cloud companies in Israel-Amazon, Google, and Microsoft. "We brought Amazon AWS to Israel before they had an official local presence. It feels as though history is repeating itself; the initial demand for cloud services we saw back in 2012 is now resurfacing, driven by an ever-growing hunger for artificial intelligence," says Tabachnik.
On the ground, Anthropic has been active in the Israeli market since its inception. Any software engineer or IT manager can open a Claude account and begin developing within minutes, without needing to speak to a representative, whether local or international. However, AI companies prefer a "boots-on-the-ground" approach to boost sales by penetrating enterprises that require more complex, customized software systems.
"When working with Anthropic, we typically engage with clients who want to develop applications tailored to their specific business needs, rather than purchasing off-the-shelf software such as Salesforce," says Tabachnik. Consulting firms serve as a bridge for Anthropic to reach large and mid-sized enterprises that prefer local procurement, require compliance with local regulations, need integration with various existing systems, and demand high standards for user authentication and stringent cybersecurity protocols. Such clients are typically found in the financial, healthcare, government, and defense sectors.
SpaceX: Exclusive distributor
SpaceX is also currently taking its first steps in Israel, seeking to promote its software development engines: Grok Bot, a system for building personal agents, and Cursor, a software development engine designed for professional programmers and enterprises.
The company, owned by trillionaire Elon Musk, has selected E-Square,-the AI consulting and development arm of Malam Team, to serve as its first, and currently only, representative in Israel.
"Switching between different AI tools and models is very easy, and companies are making an effort to prevent such churn," says Eliran Eliasy, CEO of E-Square. "One approach is to establish a local presence, a team on the ground to support these companies. Typically, these are firms that not only facilitate development projects but also provide tools to optimize AI computing costs (token usage), along with systems for monitoring and overseeing AI use in an organization. No one wants to wake up one morning to a surprise $100,000 bill incurred by a developer through uncontrolled token consumption."
"In the past, we were accustomed to seeing high-tech companies develop a product and mass-market it to business customers who would purchase and install it online with minimal involvement from the vendor. The entry of AI products into the enterprise market over the past eighteen months has shifted this trend. Companies are no longer merely developing products; they are selling them through a model that incorporates 'on-site' representatives," says Yair Snir, managing director at DTC.
"This approach has given rise to a new role: the 'FDE'-short for Forward Deployed Engineer. These engineers assist in tailoring AI tools to the specific needs of a client, develop various projects for them using these tools, and help monitor their usage. The emergence of this role is linked to two factors: these new technologies are more complex to implement and operate, and, at the same time, client companies have laid off large numbers of employees and now require external support. For AI giants, contracts that include FDE services tend to be larger-and they also increase the client's dependency on the vendor."
While the use of on-site representatives may boost sales and deal sizes for AI giants, it also erodes their profitability, as these complex AI projects are typically handled by partners such as CloudZone or E-Square. Many in the market point to Palantir, which operates using a service-representative model and reported an operating margin of 62% in August, as a benchmark. Palantir, however, operates in a market with low competition, whereas companies such as Anthropic or OpenAI are currently incurring heavy losses.
Furthermore, local partners, including Israeli firms, make a point of not committing to any single AI company. E-Square encourages users of SpaceX’s Grok to switch between different language models depending on their specific needs and costs; it also offers free, open-source language models for simple tasks. Similarly, CloudZone notes that one of the reasons enterprise clients seek them out is a proprietary product developed by the company, which facilitates rapid migration between various language models, such as those from OpenAI, Anthropic, and Google, to help reduce costs.
Published by Globes, Israel business news - en.globes.co.il - on October 21, 2026.
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