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Alibaba to invest £23bn in cloud infrastructure

Image credit: REUTERS/Steve Marcus

Alibaba Cloud – the technology giant’s cloud computing subsidiary – has announced that it will invest RMB 200bn (£23bn) in its infrastructure, prompted largely by increased demand amid the coronavirus pandemic.

Alibaba Group is among the world’s most valuable companies, spanning e-commerce, e-payment, search engines and cloud computing, among other sectors.

Alibaba Cloud provides cloud computing services such as data storage, data processing and DDoS protection to a huge number of clients, making it the largest cloud computing company in China and the third largest globally (behind Amazon and Microsoft). Domestically, Alibaba faces competition in the cloud computing space from e-commerce rival JD.com, as well as Tencent and Baidu.

Although cloud computing services account for just a small fraction of Alibaba’s total revenue, it is growing rapidly; the company's latest earnings report revealed that cloud revenue grew by 62 per cent to £1.2bn in the last quarter.

Today, Alibaba Cloud announced a £23bn investment in its infrastructure over the next three years. The investment will focus on expanding its data centres and their resources, including its operating system, servers and semiconductor technologies.

Jeff Zhang, Alibaba CTO and president of Alibaba Cloud Intelligence, said: “By increasing our investment on cloud infrastructure and fundamental technologies, we hope to continue providing world-class, trusted computing resources to help businesses speed up the recovery process and offer cloud-based intelligent solutions to support their digital transformation in the post-pandemic world.”

Alibaba said that the vast investment was spurred by increased focus on the digital economy, but also by the coronavirus pandemic.

As hundreds of millions of people have gone into quarantine in order to slow the transmission of the virus responsible for the coronavirus pandemic, demand has boomed for services such as video conferencing, livestreaming and other online workplace communications tools, such as Alibaba’s DingTalk, which has faced lags due to vastly increased activity. Other remote working tools such as Microsoft Teams and Slack have occasionally wobbled under the strain of the increased activity and demand worldwide in recent weeks.

Zhang added: “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”.

Alibaba offered its cloud computing resources to assist the Hangzhou city government in creating and rolling out a health-monitoring platform which rates individuals’ exposure to the coronavirus with a traffic-light system 'Health Code' based on self-declared health status, travel history, and close contacts. The controversial system was ultimately expanded across the country.

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