The Alibaba Group has lowered prices for its cloud computing services for clients by up to 59%, reflecting significant discounts in the domestic market. The sector is working to outperform competitors and stimulate growth by significantly reducing prices.
This move aligns with the increasing demand for cloud computing to support the global surge in artificial intelligence development, along with the importance of restructuring internal complexities. CEO Eddie Wu is leading a wide-scale reform effort to help revitalize Alibaba’s core businesses, including e-commerce, as reported by Bloomberg and cited by Al Arabiya Business.
Alibaba scrapped plans for the public listing of its cloud business in November due to challenges in accessing advanced Nvidia Corp chips needed for competition, facing increased pressure from Tencent Holdings and government-backed service providers.
The Hangzhou-based company has reduced prices of nearly 500 cloud products by an average of 23% on Monday. These discounts are now available to customers in 13 regions, including Japan, Indonesia, the UAE, and Germany.
The company’s shares in Hong Kong declined after the announcement, dropping by approximately 0.5%, but remained elevated.
Alibaba is considered the largest cloud service provider in China but a relatively small player compared to global giants Amazon and Microsoft. The company has lost market share in China to state-backed competitors and faced challenges expanding internationally due to internet restrictions in China and US trade restrictions. Revenue for the cloud division, which surpassed $11 billion in the last fiscal year, is expected to decline by 2% in the first quarter of March.
Chairman Joe Tsai acknowledged last week in a meeting with Norges Bank, a major shareholder, that restrictions on American chips pose a “significant challenge” to Chinese cloud service providers. Tsai pointed out that limited access to Nvidia’s AI chips would impact companies in the short to medium term before they can rely on strong local alternatives.
These changes follow Alibaba’s local price cuts of over 100 core cloud offerings by up to 55% in February, triggering a price war as competitors like JD.com offered special discounts of their own. February also witnessed the second significant price reduction by Alibaba in recent months.
Cloud computing executives announced on Monday that new and existing international customers would benefit from the new discounts, including a reduction in data storage package price for one year from $63 to $16.99, which has become popular among small businesses.
