Alibaba Cloud seeks bigger edge in home market amid growing competition, threat of US sanctions
- Price cuts announced by Alibaba’s cloud computing services unit could help it gain local market share, but it could also trigger a price war
- Alibaba has high hopes for the cloud unit, which remains a market leader in China while grappling with slowing growth last year
Big price cuts taken by Alibaba Cloud, the digital technology unit of e-commerce giant Alibaba Group Holding, are likely to help it carve out a bigger slice of the country’s cloud computing services market, but it could also kick off a price war, according to analysts.
The move comes after Alibaba, which remains the top industry player, saw its market share fall to 32.6 per cent in the second half of 2022 from 34.5 per cent in the first half, according to a report published this week by research firm IDC.
“As the split-up begins and the organisational structure is being gradually adjusted, Alibaba Cloud has greater autonomy to carry out price cuts because it used to be bounded more by things like the entire group’s profit margin,” he said.
In a recent interview with Chinese media veteran Qin Shuo, Zhang said he decided to personally manage the cloud unit because it is “important enough”.
“[The cloud business] may be among Alibaba’s most certain hopes – it is an important opportunity bestowed by the times,” Zhang said. “We have gone through 14 years of development, and we are in the best position in terms of cloud infrastructure and the accumulation of digital experiences.”
