Jack Ma, Alibaba's CEO and founder, meets the media during his firm's IPO kickoff at the New York Stock Exchange last year. (Photo : www.thenextweb.com)
Alibaba Group Holding Ltd. has announced plans on Wednesday, July 29, to invest $1 billion in Aliyun, its cloud computing arm, for its global expansion which is seen as a challenge to Amazon.com Inc.'s Web Services division, according to a Reuters report.
A statement released by Alibaba said that the investment will be used to set up data centers in Singapore, Japan, Middle East and Europe. This also includes partnerships with telecom and enterprise technology providers in the countries mentioned.
The report said that despite moves by both Alibaba and Amazon to avoid competing directly in e-commerce outside China, the international expansion of Aliyun was reportedly aimed at Amazon Web Services, which is considered a profitable division of the U.S.-based company.
Simon Hu, the president of Aliyun and former head of Alibaba's microfinance arm, said in an interview that Aliyun, which focused on the Chinese market during its first six years, can now challenge U.S. cloud players, such as Amazon, Microsoft Corp. and IBM Corp. since it has attained technological maturity.
"Our goal is to overtake Amazon in four years, whether that's in customers, technology, or worldwide scale," Hu said. "Amazon, Microsoft and others have already laid the groundwork for us by educating the markets about cloud in the U.S. and Europe, so we have an even better opportunity to join in the competition."
According to the report, Aliyun will face tough competition from some of the biggest tech names as it expands. According to Synergy Research Group, Amazon led the global cloud infrastructure market with 28-percent share in 2014, followed by Microsoft, IBM and Google Inc. at 10, 7 and 5 percent, respectively.
Aliyun opened a data center in Silicon Valley, California, in March after Amazon made entry into China last year.
Aliyun said that it has amassed 1.4 million customers, amounting to more than a 20-percent market share in China, largely attributed to Chinese sellers who host their online storefronts with Alibaba.
Aliyun also said on July 29 that it partnered with Yonyou, a Chinese enterprise software provider, to offer cloud infrastructure services to its customers.
Hu said that the partnership would help promote cloud adoption in the country, which is expected to grow as the government's campaign to digitize the nation's industry continues.
