Chinese tech giant Alibaba Group has unveiled plans of investing up to 200 billion yuan or $28.26 billion in its cloud computing business over the next three years. The substantial investment is meant to bolster the company's rapidly growing business division in order for it to better compete with global players such as Amazon and Microsoft.
The investment also highlights Alibaba's focus on the cloud market, a business it sees as could be the driver for its future growth. According to Alibaba, the money it has prepared will be put towards the further development of infrastructure and technologies related to chips, networks, operating systems, and servers. The company added that the decision to bolster the business was partly due to the increased demand for cloud services amid the ongoing global pandemic.
Alibaba Cloud Intelligence president, Jeff Zhang, mentioned in a statement that the coronavirus pandemic has placed massive stress on the economy across all sectors. In line with this, the company is placing added focus on the digital economy and it believes its services will be of particular use given the current situation.
Alibaba is currently the largest cloud computing service provider in China, taking up most of its market share. It is facing rising competition from other Chinese tech giants such as JD.com, which is also one of its main rivals in the e-commerce space. Both companies currently offer various cloud services such as data storage, elastic computing, relational databases, data processing, content delivery networks, and security protection.
However, outside of China, Alibaba is facing stiffer competition from much larger companies such as Amazon and Microsoft. The foreign tech firms holds a substantial market share in the international cloud market. Despite Alibaba's continued efforts to penetrate the international market, it still lags behind its foreign counterparts.
Outside of China, Alibaba operates a total of 19 data centers and 56 availability zones around the world. With the added investment, the company will likely be able to grow those numbers and expand its operations further into other markets. It still has to be seen if the added investment would allow it to take larger chunks of the international market share in the coming years.
Alibaba's cloud computing segment currently only accounts for about 7 percent of its total revenues. While it is still a small portion of its much wider online business, the company does consider it to be a critical area in its future. Alibaba chairman and chief executive officer, Daniel Zhang, previously mentioned in an interview that cloud computing could be the company's main business in the near future.
