Alibaba to close data centres in Australia, India amid expansion in Southeast Asia, Mexico

Alibaba Group Holding's cloud computing unit plans to shut down its data centres in Australia and India, as the company prioritises infrastructure spending in other markets.

Citing the move as part of its "infrastructure strategy update", Alibaba Cloud said the decision was made after a "careful assessment" amid new efforts to "expand investment in Southeast Asia and Mexico", the company said in a statement on Thursday. Alibaba owns the South China Morning Post.

Alibaba Cloud plans to suspend its data-centre services in India after July 15, while its facilities in Australia will cease operations after September 30. The company said it has notified customers in those two countries to move their business to its data centres in Singapore and other countries.

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The affected data-centre zones - which refer to areas with either one or multiple facilities - are in Sydney, which was set up in 2016, and in Mumbai, established in 2018.

Racks of servers at a data centre run by Alibaba Cloud, the cloud computing subsidiary of e-commerce giant Alibaba Group Holding. Photo: Handout alt=Racks of servers at a data centre run by Alibaba Cloud, the cloud computing subsidiary of e-commerce giant Alibaba Group Holding. Photo: Handout>

Cloud computing technology enables enterprises to distribute over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are stored and managed inside data centres.

The latest initiative by Alibaba Cloud, mainland China's leading cloud infrastructure services provider, reflects the company's efforts to attract more customers in major markets amid headwinds from geopolitical tensions and a lack of advanced chips used in data centres for artificial intelligence (AI) projects.

Alibaba Cloud still trails major US rivals - including Amazon Web Services, Microsoft Azure and Google Cloud - which accounted for 31 per cent, 26 per cent and 10 per cent, respectively, of the global cloud infrastructure services market in the fourth quarter last year, according to data from tech research firm Canalys.

Still, Alibaba Cloud's latest initiative could open potential new deals for the company. Global private equity investors and asset managers are preparing for billions' of dollars worth of mergers and acquisitions and investments linked to data centres in the Asia-Pacific, as the AI boom fuels demand for digital infrastructure.

Alibaba Cloud, the digital technology unit of Alibaba Group Holding, has been a major sponsor of the Olympic Games since 2017. Its technology has helped drive efficiencies in the organisation of major sporting events under the International Olympic Committee. Photo: Shutterstock alt=Alibaba Cloud, the digital technology unit of Alibaba Group Holding, has been a major sponsor of the Olympic Games since 2017. Its technology has helped drive efficiencies in the organisation of major sporting events under the International Olympic Committee. Photo: Shutterstock>

Founded in 2009, Alibaba Cloud serves about 80 per cent of mainland China's technology companies and half of AI large language model (LLM) companies use its digital infrastructure, according to Alibaba co-founder and chairman Joe Tsai in a speech last October. LLMs are the technology underpinning generative AI services like ChatGPT.

Last month, Alibaba Cloud unveiled plans to expand into certain key markets over the next three years. The company is set to to build its cloud facilities in Mexico, while setting up new data centres in Malaysia, the Philippines, Thailand and South Korea by 2027.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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