Alibaba Cloud expands data centres as it steps up challenge to Amazon, Microsoft

Alibaba is planning to launch four new data centres across the world, the Chinese e-commerce giant said on Monday, as it steps up its competition against Amazon and Microsoft in the rapidly-growing cloud computing market.

The data centres will be located in Dubai, Tokyo in Japan, Germany and Sydney, Australia. It takes the number of Alibaba Cloud data centres outside of China to eight, with the Chinese technology giant now on nearly every major continent.

“With the addition of those four data centres, it will cover our customers globally,” Ethan Yu, general manager of Alibaba Cloud Global, told CNBC in a phone interview.

In each market, Alibaba Cloud has formed joint ventures (JV) and partnerships. In Dubai, Alibaba has formed a JV with Meraas Holdings called YVOLV. In Germany, Alibaba has partnered with Vodafone to open its first data centre in Europe. Alibaba will use Vodafone’s data centre in order to sell its cloud services. In Japan, a JV with Softbank called SB Cloud Corporation was formed earlier this year.

The Sydney data centre will come online “within a few weeks,” Yu told CNBC. The executive said Alibaba was not disclosing the financial terms of the deals but there are revenue sharing agreements in place. The JV with SoftBank will be 60 per cent owned by SoftBank with 40 per cent owned by Alibaba, the companies said earlier this year.

Alibaba’s global expansion is a bid to challenge the likes of Amazon, Microsoft, IBM and Google, who combined control over half of the worldwide cloud market, according to data from Synergy Research Group. Alibaba is much smaller than Amazon Web Services (AWS) which leads the market, but is growing very quickly.

In its latest fiscal quarter ended September 30, Alibaba reported revenue from its cloud computing division that increased 130 per cent year-on-year to US$224 million. This outpaced the growth seen by Microsoft, Google, and Amazon’s cloud units.