Alibaba Cloud cuts prices again, this time for international customers as AI generates surging demand

Alibaba is cutting prices by as much as 59 per cent for international users of its compute, storage, network, database and big data products
Competition has been heating up in the compute space amid intense demand for AI services, but Alibaba lags behind rivals like Amazon and Google globally

Alibaba

Ann Caoin Shanghai

Published: 7:30pm, 8 Apr 2024

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Alibaba Group Holding’s cloud computing unit has slashed prices for international customers by up to 59 per cent, as the tech giant fights to woo users amid a global race for computing resources driven by rapid artificial intelligence (AI) development.

The international cloud business of Alibaba, which owns the South China Morning Post, is facing headwinds from geopolitical tensions and a lack of access to advanced chips. Company chairman Joe Tsai said in a recent interview that US restrictions on the exports of advanced chips from Nvidia “affected our cloud business and our ability to provide high-end computing services to customers”.

In the company’s latest round of price cuts, the cloud service provider’s international customers will see an average reduction of 23 per cent across five categories of core public cloud products using Alibaba’s data centres out of mainland China: compute, storage, network, database and big data products. The price reductions will take immediate effect, the company announced at its Spring Launch event on Monday.

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The latest cuts, which follow price cuts for domestic customers in February, reflect the company’s efforts to attract more customers as the adoption of AI picks up steam across a multitude of industries.

In February, Alibaba Cloud announced price reductions as high as 55 per cent for more than 100 core products for mainland China customers, the largest discount offering in the company’s history.

In a previous round, Alibaba Cloud slashed prices last May on a number of core products and services in China by up to 50 per cent.

“Our latest pricing strategy is designed not only to reward long-term subscribers with more substantial discounts, but also to ensure that businesses can have a stable foundation to develop their long-term strategies when planning and developing their own AI applications,” Selina Yuan, president of international business for Alibaba Cloud Intelligence, said at Monday’s event.

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The cloud business and Alibaba’s e-commerce business were highlighted by Alibaba CEO Eddie Wu Yongming in February as the group’s two core businesses, after the tech giant announced a sweeping corporate restructuring a year ago amid a tough macro environment.

Alibaba Cloud is currently the biggest player on the mainland in terms of customer spending among cloud infrastructure service providers. It also serves 80 per cent of China’s technology companies and half of the companies involved in the development of large language models, the technology used to train generative AI services like ChatGPT.

As of the fourth quarter, its global market share lagged behind US rivals including Amazon Web Services, Microsoft Azure and Google Cloud, which accounted for 31 per cent, 26 per cent and 10 per cent of the market, respectively, according to market analytics firm Canalys.

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