Alibaba tops up cloud investment with $1B

Chinese internet giant says the investment will be used to expand its global presence, including new data centers in Singapore and Japan, as well as boost its partner network and cloud capabilities.

Alibaba Group is setting aside US$1 billion to drive growth in its cloud business, Aliyun, as the Chinese internet giant looks to edge out US rival, Amazon.

The investment will be used to expand Aliyun's global presence including new data centers, grow its partner ecosystem, as well as develop new cloud and big data products, Alibaba said in a statement.

Alibaba CEO Daniel Zhang said: "This additional US$1 billion investment is just the beginning. Our hope is for Aliyun to continually empower customers and partners with new capabilities, and help companies upgrade their basic infrastructure. We want to enable businesses to connect directly with consumers and drive productivity using data."

The Chinese internet company currently operates five data centers in China and Hong Kong, and in March 2015 opened its first facility outside its domestic market in Silicon Valley. Part of its US$1 billion investment will be channeled toward building new data centers in Singapore, Japan, the Middle East, and Europe.

Alibaba also plans to boost it Marketplace Alliance Program, which touts itself as a one-stop provider of cloud services and deployment worldwide, and includes partners Singtel, Intel, Equinix, and Towngas.

Aliyun President Simon Hu said in an interview with Reuters that the cloud division had accumulated sufficient technological maturity over its first six years, to look beyond Chinese shorelines and grab marketshare from global cloud players such as Amazon Web Services, Microsoft, and IBM.

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Hu noted that Aliyun was aiming to surpass AWS in four years, be it in terms of customer base, technology expertise, or global scale. "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."

In its statement, Alibaba also announced a new partnership with China's largest software vendor, Yonyou Software, to grow both vendors' customer base in cloud computing, big data, digital marketing, and e-commerce. Yonyou also is the largest enterprise ISV (independent software vendor) in the Asia-Pacific region.

The alliance will provide new resources for Yonyou to grow its enterprise software business, while Aliyun will be able to address enterprise customers with "a more comprehensive set of services", Alibaba said.

According to Chinese IT research firm CCWResearch, cloud computing is estimated to generate over 2.2 trillion yuan (US$362.3 billion) in output value and create 5 million job opportunities over the next three years.

The Chinese government in December announced plans to rate the trustworthiness of cloud vendors, allowing only those with full security clearance to partake in government projects. The move was said to leave foreign companies out of government procurement contracts.

A Chinese official had said the Chinese government was developing a cloud security assessment, authorization, and monitoring system similar to the U.S. government's Federal Risk and Authorization Management Program.

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