Alibaba kicks off spending spree with $1 billion for cloud

Alibaba Group Holding Ltd.’s (BABA) cloud division has pledged $1 billion to support startups in Asia, marking one of its largest outlays since the tech giant pledged to boost spending and move past a bruising antitrust investigation at home.

The $1 billion will be the initial funding for Project AsiaForward, which aims to nurture 100,000 developers and tech startups over the next three years, Alibaba said in a statement Tuesday. The company aims to build a million-strong talent pool by providing training for developers, as well as connecting entrepreneurs with venture capital and other opportunities.

Jack Ma’s e-commerce titan said last month it will invest all incremental profits into areas like technology and e-commerce, after Chinese antitrust regulators imposed a record $2.8 billion fine that drove the firm to its first quarterly loss in nine years. Chinese tech giants from Alibaba to Tencent Holdings Ltd. and Meituan have all pledged to dramatically boost spending, as Beijing’s crackdown on the industry forces companies to find new growth drivers.

“We are seeing a strong demand for cloud-native technologies in emerging verticals across the region, from e-commerce and logistics platforms to fintech and online entertainment,” Jeff Zhang, president of Alibaba Cloud Intelligence, said in the statement. “Our focus on innovation and data center investments, as well as talent development is in anticipation of a digital-first future.”

Alibaba’s cloud business, modeled on Amazon Web Services, grew from the needs of its massive online shopping operation to become one of the e-commerce giant’s biggest growth engines. But its expansion is slowing in the wake of competition from Tencent and Huawei Technologies Co. Its cloud revenue rose just 37% in the March quarter, the slowest pace since 2014, after a major customer pulled out.

ByteDance Ltd.’s viral video service TikTok decided to drop Alibaba as a cloud provider during the period and instead relied more on its own inhouse servers and American rivals such as AWS, a person familiar with the matter said, asking not to be identified talking about a private decision.Alibaba Cloud is opening its first datacenter in the Philippines by the end of this year and will build an innovation center in Malaysia. Currently operating in 75 so-called availability zones in 24 regions, the firm has also launched a third datacenter in Indonesia. It was the No. 3 Infrastructure-as-a-Service, or IaaS cloud provider globally in 2020, behind Amazon.com Inc. and Microsoft Corp., according to industry researcher Gartner.

“Our strategic roadmap for APAC includes targeted investments to facilitate the digital transformation of local businesses,” Selina Yuan, general manager of Alibaba Cloud Intelligence’s international business unit, said in the statement. “We see these investments as all the more timely given the impact of the pandemic and the sharp rise in demand for digital business tools.”

Fierce rival Tencent said last week it’s launching four datacenters in Bangkok, Frankfurt, Hong Kong and Tokyo, giving its cloud business a presence in 27 regions worldwide.

Source-Bloomberg