Alibaba cloud unit sets sights on Amazon in US$1 billion global push

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Alibaba is targeting Amazon's Web Services cloud computing arm with a US$1 billion investment push. Photo: Reuters

Published: 10:24am, 30 Jul 2015

China's Alibaba Group said on Wednesday it would invest US$1 billion into its Aliyun cloud computing arm to challenge Amazon.com lucrative Web Services division, opening a global front in the battle between the two e-commerce giants.

With the global cloud computing market estimated by analysts to be worth about US$20 billion, Alibaba said in a statement the investment would go toward setting up new Aliyun data centres in the Middle East, Singapore, Japan and Europe. The firm also plans to strike business partnerships with telecom and enterprise technology providers in those regions.

Although Alibaba and Amazon have so far avoided competing directly in their core business of e-commerce outside China, Aliyun's international expansion takes aim squarely at Amazon Web Services (AWS), an increasingly central and profitable division of the Seattle-based company.

Amazon shares soared last week after the company reported, among other items, an 81 per cent revenue increase for AWS, which hosts Web customers like Netflix and Airbnb.

Simon Hu, the president of Aliyun and former head of Alibaba's microfinance arm, said in an interview that Aliyun had focused on the Chinese market in its first six years but has now attained the technological maturity to challenge U.S. cloud players like AWS, Microsoft and IBM.

"Our goal is to overtake Amazon in four years, whether that's in customers, technology, or worldwide scale," Hu said.