Alibaba, the Chinese tech conglomerate that has gone out of its way to not challenge Amazon’s e-commerce business in the U.S., said today that courtesy doesn’t extend to the cloud.
Alibaba plans to invest $1 billion into its cloud computing arm, called Aliyun, to challenge other cloud players like AWS, Microsoft Azure, Google Cloud Platform and IBM. The money will be used in part to set up new data centers in the Middle East Singapore, Japan and Europe and to partner with telecom and enterprise providers in those regions, according to a company blog post.
Aliyun’s President Simon Hu told Reuters he has the goal of overtaking “Amazon in four years, whether that’s in customers, technology, or worldwide scale.”
“Amazon, Microsoft and others have already laid the groundwork for us by educating the markets about cloud in the U.S. and Europe, so we have an even better opportunity to join in the competition,” he said.
For the past six years, Hu said Aliyun has been focused on the Chinese market, but is now comfortable expanding its reach. In March, Aliyun opened a data center in Silicon Valley — its first outside China — to serve U.S. customers. At the time of that announcement, it qualified the launch as testing the waters in the U.S., but clearly now with a $1 billion investment on tap, it plans on going after Amazon’s very lucrative business in a big way.
Word of Alibaba’s investment comes just days after Amazon reported a profitable second-quarter, fueled by revenue from its cloud division. In Q2, AWS revenues rose to $1.8 billion, up 81 percent from the $1 billion reported by the company a year ago. Operating profit for the unit grew by more than 400 percent to reach $391 million.
Alibaba, which debuted on the New York Stock Exchange last year in a record-breaking IPO, has also opened a engineering office in Amazon’s hometown of Seattle. Since its debut, the company’s stock has struggled along with a broader stock market crash in China, with shares trading at around $80 each, down from a high of $120.