Alibaba Cloud pledges $1B to boost overseas alliance
Alibaba is known for its sprawling e-commerce empire, but like Amazon, cloud service has been a big driver of its revenues in recent years.
The Chinese cloud giant is ready to double down on its overseas reach and announced today a $1 billion investment in a "global partner ecosystem upgrade." Alibaba Cloud is now the world's third-largest public cloud provider, an achievement that's inseparable from the large network of local allies it's formed worldwide.
The company is constantly recruiting local partners to take on responsibilities such as sales, technical support and customer services. The $1 billion initiative is meant to "support partners' technology innovation and their market expansion with Alibaba Cloud in the coming three fiscal years," the company said. The money will come in both financial and non-financial incentives, including funding, rebates and go-to-market initiatives.
Alibaba Cloud currently has around 11,000 partners worldwide, including Salesforce, VMware, Fortinet, IBM and Neo4j.
Alibaba Cloud enjoyed a 9.5% market share in 2021, trailing Microsoft (21%) and Amazon (39%), according to market research firm Gartner.
The cloud service, with a base in Hangzhou and an expanding footprint around the world, has become the go-to cloud solution for many Chinese businesses expanding overseas. But rising national security tensions between China and the West have driven some customers away from its cloud platform. In a bid to win over U.S. regulators, TikTok reportedly moved off Alibaba Cloud and moved all its U.S. data to Oracle servers.
Even early-stage Chinese companies are joining the technological bifurcation. Over the past few months, several consumer-facing internet startups, including a social network and a productivity tool, told me they stored all their offshore user data on foreign cloud services only to avoid regulatory scrutiny down the road.
Alibaba Cloud has recently suffered from slowing growth and the loss of one key cloud client, which is speculated to be ByteDance by industry observers. As the company noted in its June earnings report:
Year-over-year revenue growth of our Cloud segment reflected recovering growth of overall non-Internet industries, driven by financial services, public services, and telecommunication industries, partly offset by decline in revenue from the top Internet customer that has gradually stopped using our overseas cloud services for its international business due to non-product related requirements, online education customers as well as softening demand from other customers in China’s Internet industry.
Western tech firms are under the same decoupling pressure in China. The country's data law bans user data from leaving its borders, so the likes of Apple and Tesla have long been storing Chinese user data in domestic cloud centers.