With China’s demand for cloud-computing services expected to rise by nearly 45 percent in 2015, the demand for cloud providers is at a fever pitch. (Photo : Reuters)
Internet titans Alibaba and Tencent have become China’s top two cloud computing service providers, but they have taken different paths to control the field while competing with each other, according to a report from the Beijing-based Economic Observer.
The latest battlegrounds are startups, online-to-offline (O2O) businesses and ushering old-economy companies into the Internet age, the report said.
Alibaba and Tencent have already locked horns through O2O businesses and the financial sector, the newspaper added, citing that the two companies are already in bitter competition with their respective taxi-hailing apps Didi and Kuaidi before the sector consolidated through the merger of the rival companies.
In the O2O industry, Tencent is an investor in review site Dianping, while Alibaba holds a key stake in Meituan, a website offering daily deals.
In the financial sector, Alibaba's Ant Financial services shook the mutual funds business in China after launching Yuebao, which allows users to invest in a money market fund through Alibaba's Alipay services. Tencent has also recently expanded into the financial sector through its WeBank and Tenpay services.
The competition between Alibaba and Tencent in cloud computing services, meanwhile, focused more on gaining resources and companies in their business ecosystems, but have adopted different strategies, the report said.
Wang Zhiyong, vice president at Tencent's Qcloud, said that the company is eyeing software and game developer startups as well as video streaming websites, as Alibaba still dominates the e-commerce field.
Wang said that Qcloud's cloud computing service stand out with its ability to handle audio, video, image compression and wireless networks to improve the network connectivity of websites.
Tencent also has a strong foothold in the public sector, with over 40,000 government agencies having accounts on WeChat, the company's social networking and instant messaging app, the report added.
Wang said that Tencent is expanding with the help of venture capital funds, which are willing to invest in startups recommended by the company. These startups will be offered free access of Qcloud during the first six months and given a 50-percent discount in the next six-month period.
Meanwhile, Alibaba's Aliyun cloud computing service announced on Wednesday the past week one-stop solutions for companies in various sectors to build and improve their online presence, the Economic Observer reported.
Although Alibaba and Tencent also face competition with international cloud computing services such as Oracle and Amazon--which are often favored by Chinese companies--the report said that these foreign companies have been unable to adapt quickly to China's rapidly changing business environment.
As two of China's biggest Web companies move into the cloud computing industry, their competition is an essential part of their efforts to establish a firm position in the future, the Economic Observer said.
