This is a research in progress study that explores the extent in which the public and private sectors’ collaboration in the area of cloud computing is contributing to the expansion of the digital entrepreneurial ecosystem for smart cities. More specifically, we focus on the case study of the public sector’s collaboration with the AWS provider in Bahrain and the institutional dynamics surrounding this. In this paper we explore current developments in Bahrain’s digital business ecosystems and the use of cloud technology as part of smart city initiatives. We argue that the current collaboration represents a shift toward smart city solutions and set in motion regulative and socioeconomic institutional changes. We also present a prospective view of how the cloud technology can potentially create new business models and innovative smart city solutions as is the case in many projects in the EU region. © 2018 Institution of Engineering and Technology. All rights reserved.