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Alibaba Takes Lead in China’s Cloud Services Market

By Ding Yi / Jun 18, 2020 04:47 PM / Business & Tech

Photo: VCG

Photo: VCG

Alibaba, Huawei, Tencent and Baidu collectively controlled 81% of China’s cloud infrastructure services market in the first quarter of 2020, as demand for telecommuting, online education and digital entertainment cloud services increased during the Covid-19 pandemic.

Of the four companies, Alibaba Cloud was the biggest winner, controlling 44.5% of the Chinese market, which grew overall by 67% year-on-year to $3.9 billion during the period, according to a report by research firm Canalys.

Huawei Cloud was the second-largest cloud services provider with a market share of 14.1% in the quarter, followed by Tencent Cloud, which saw its market share drop to 13.9% from 18% in the fourth quarter of 2019, the report showed. Baidu AI Cloud came in fourth with a market share of 8.6%.

China’s spending on cloud services accounted for 12.5% of the global total in the first three months of the year, 2.5 percentage points higher than a year ago. Canalys attributed the share increase to many businesses’ adoption of remote working tools and students’ use of online learning systems under the coronavirus-induced lockdown. During the first quarter of 2020, China was the world’s second-largest cloud services consumer after the U.S., the report added.

Canalys predicts that China’s demand for cloud services would continue to gain momentum in the next 12 months thanks to the government’s bet on “new infrastructure”, which it wants to use to accelerate its tech-driven economic transformation.

“New infrastructure” refers to projects that support tech and science-based developments involving artificial intelligence (AI), the Internet of Things (IoT), big data, robotics and 5G, among others.

The government-led “new infrastructure” campaign has made a splash among China’s tech companies. In April, Alibaba unveiled a three-year plan to invest 200 billion yuan in its cloud infrastructure. A month later, Tencent followed suit with plans to pour 500 billion yuan into high-tech areas of cloud computing, 5G networks, blockchain, AI and IoT over the next five years.

Contact reporter Ding Yi (yiding@caixin.com)

Related: Tencent to Invest $70 Billion in ‘New Infrastructure’ Supporting AI and Cloud Computing


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