Alibaba to Invest ¥200 Billion in Cloud Services Amid Covid-19

By That's GBA, April 21, 2020

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Tech giant Alibaba announced plans to invest RMB200 billion in its cloud infrastructure over the next three years, following increased demand for the services during the coronavirus outbreak in the first quarter of 2020. Alibaba Cloud will use the investment for research and development of core technologies, including cloud operating systems, networks, servers and chips.

The public health crisis may have provided the impetus for the additional investment in cloud computing as an even greater shift was made towards digital channels in recent months.

For those looking for a brief explainer on what cloud computing is, here’s a take from the experts at US-based cloud computing provider Oracle:

“In simple terms, cloud computing is renting instead of buying your IT. Rather than investing heavily in databases, software, and equipment, companies are opting to access their compute power via the internet and pay for it as they use it. When a company chooses to “move to the cloud,” it means that its IT infrastructure is stored offsite, at a data center that is maintained by the cloud computing provider.”

Alibaba’s workplace communications app DingTalk, which relies on cloud computing services, saw 9.7 million downloads on the App Store in China during the first quarter of 2020. It was the most downloaded app among China’s iPhone users for the first three months, according to data from Sensor Tower.

CNBC reported that despite cloud computing only accounting for 7% of the company’s total revenue, Alibaba has shown an interest in building upon a technology that’s viewed as “a critical area in the future.” Daniel Zhang, CEO of Alibaba and chairman, told CNBC in a 2018 interview that he thinks, “cloud will be … the main business of Alibaba in the future.”

According to Synergy Research Group, Alibaba is “substantially outpacing overall market growth” and “gaining market share,” along with Tencent and Google. However, Amazon and Microsoft remain the global market leaders.

Image via Synergy Research Group

In China, Alibaba accounted for 43% of cloud computing market share in the second quarter of 2019. The two other BAT companies, Baidu and Tencent, also showed strong growth as domestic demand continues to grow.

[Cover image via @阿里云/Weibo]

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