Exclusive | Tencent’s 0.01 yuan bid for Xiamen cloud contract raises ire
Tencent Cloud won a contract to provide cloud computing to Xiamen for 0.01 yuan, even as the city government earmarked 4.95 million yuan for the one-year contract.
Tencent Holdings, the operator of China’s largest online social network, is creating price distortions in the country’s market for cloud computing, with its recent nominal bid to provide the service to a Chinese city government, said a competitor.
The Shenzhen based company placed a 0.01 yuan nominal bid in a tender called by the government of Xiamen city for cloud computing services, according to tender documents. Xiamen’s government had earmarked a budget of 4.95 million yuan for the one-year contract.
Among the bids received, China Telecom offered 1.7 million yuan, while China Unicom quoted 3.1 million yuan, while a host of private technology companies and phone network operators provided bids in between.
Alibaba Cloud, which runs the cloud computing business at Alibaba Group Holdings, didn’t participate in the tender. Alibaba Group is owner of the South China Morning Post.
“As cloud computing becomes the choice of an increasing number of big companies, we should think about how to provide valuable technology and services to the customers, said Hu Xiaoming, president of Alibaba Cloud, during the company’s Computing Conference 2017 event in Shenzhen. “When everyone wants to contribute to the industry through personal success, [Tencent’s founder] Ma Huateng and his cloud team have destroyed the entire industry with the 0.01 yuan offer. It’s irresponsible to the cloud computing market.”
Hu’s comment reflects the intensifying competition among China’s largest technology companies and phone networks for business in an industry that Bain & Co. projected could reach US$20 billion by 2020, from US$1.5 billion in 2013.
