Alibaba Group Holding maintained its lead in China’s cloud computing market in the second quarter of 2019 while Tencent Holdings and Baidu chalked up strong growth, according to a recent report released by research firm Canalys . China’s cloud infrastructure services market grew rapidly in the second quarter of 2019, with total spending up 58 per cent year-on-year at US$2.3 billion. Alibaba remains the clear leader, with a 43 per cent market share. Tencent Cloud ranked second with a share of 17.4 per cent and Baidu was fourth with 8.7 per cent, although both firms showed strong growth. “Competition in China has intensified, mainly due to local cloud service providers, including Alibaba Cloud, Tencent Cloud and Baidu Cloud,” said Daniel Liu, a research analyst at Canalys, last week. “Boosting revenue from cloud services is a top strategic priority for these companies amid growing domestic demand.” Alibaba’s cloud computing business saw revenue grow 66 per cent to 7.8 billion yuan (US$1.1 billion) last quarter, primarily driven by an increase in average revenue per customer. Tencent’s founder and chief executive, Pony Ma Huateng, said in May that the internet giant not only expects its cloud business to contribute to revenue but also serve as the platform connecting the consumer internet with the industrial internet. Earlier this year Tencent said it wanted to enable greater connectivity across Chinese industry, leveraging the capabilities and expertise it has built up serving consumers. Meanwhile, Baidu is developing an AI could computing centre in north China to help build more smart cities, according to Xinhua . Alibaba to step up cloud expansion amid growing global demand Cloud computing enables companies to buy, sell, lease or distribute over the internet a range of software and other digital resources as an on-demand service, just like electricity from a power grid These resources are then managed inside data centres. Cloud services form part of China’s drive to upgrade its economy and embrace a wide swathe of new technologies such as AI, internet of things (IoT) devices and big data analysis. Meanwhile, the introduction of next generation 5G mobile networks will open up a whole new world of internet connectivity, speed and capacity. China’s “Internet Plus” strategy introduced in March 2015, seeks to integrate the mobile internet, cloud computing, big data and IoT applications to modernise industries and manufacturing. China has the biggest internet population in the world with around 829 million users – generating a huge amount of data that needs to be stored securely and analysed for insights in a cost-effective manner – hence the need for greater cloud capacity and services. Tencent plays catch-up in cloud services as gaming business slows To be sure, China’s US$2.3 billion market size is still relatively small compared with the US$26.3 billion global market that is dominated by Amazon Web Services, Microsoft Azure and Google Cloud. Alibaba ranks fourth in the global market with a 4.6 per cent share in the second quarter of 2019, according to another report by Canalys. “Moving forward, what our business partners want is not just cloud storage and elastic computing power, but capabilities that can help them become future giants,” Lancelot Guo, Alibaba vice-president, said in May at the company’s cloud summit in Beijing. Alibaba owns the South China Morning Post. For more insights into China tech, sign up for our tech newsletters , subscribe to our Inside China Tech podcast , and download the comprehensive 2019 China Internet Report . Also roam China Tech City , an award-winning interactive digital map at our sister site Abacus .