Alibaba Cloud, a subsidiary of Chinese e-commerce giant Alibaba, will spend RMB 200 billion ($28.27 billion) on its cloud infrastructure over the next three years following an increase in demand for digital services in the aftermath of the Covid-19 outbreak in China.
Why it matters: Alibaba’s cloud revenue grew 62% in the quarter ended December 2019 compared with the same quarter a year earlier, the company said in February.
- The Covid-19 pandemic has resulted in extra demand for digital services, which are typically reliant on cloud computing services and data centers to function.
- Alibaba Cloud is the largest provider of cloud computing services in China, but falls behind Amazon and Microsoft globally.
Details: Alibaba’s investment will focus on operating system and chip development, as well as on its network of data centers, where the technologies will be deployed.
- Alibaba has seen a marked increase in the use of its technology since the beginning of the year. As many businesses requested that their employees work from home to reduce the risk of coronavirus infections, companies across China relied more heavily on tools like Dingtalk, Alibaba’s enterprise communications app.
- Dingtalk also provided a platform for online learning after schools and universities were closed due to the outbreak.
- Meanwhile, the company helped the Chinese government roll out a health passport system, a digital quarantine measure that assigned users a red, yellow, or green rating based on their health status and travel history.
- “The Covid-19 pandemic has posed additional stress on the overall economy across sectors, but it also steers us to put more focus on the digital economy,” Jeff Zhang, president of Alibaba Cloud Intelligence, said in a statement on Monday.
Context: Alibaba has increased its focus on cloud computing over the past two years, seeing the business as a major driver of growth.
- Daniel Zhang, Alibaba’s CEO, said previously in an interview with CNBC that cloud computing could become the e-commerce giant’s “main business.”