Alibaba Cloud stretches global reach with 4 new facilities

(Reuters) — Alibaba Cloud plans to open four new data facilities outside China, the cloud unit of Alibaba Holdings Ltd said on Monday, as it seeks to grab global market share from leading players Amazon.com Inc and Microsoft.

The data facilities in Dubai, Germany, Japan and Australia will extend the reach of China’s leading cloud computing service provider to every major continent, and marks the latest step in the unit’s $1 billion infrastructure investment drive.

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Also known as Aliyun, the unit has flourished domestically thanks to Beijing’s strategic emphasis on building homegrown cloud technology, while foreign firms have grappled with stringent licensing restrictions in the country.

However, it accounts for a much smaller slice of the global market for cloud computing, defined as the storage of data on remote networks rather than local servers, which is expected to reach $135 billion by 2020, according to research firm Canalys.

Alibaba Cloud is forecast to take 7.8 percent of that market, while leading players Amazon.com Inc, Microsoft, International Business Machines Corp and Alphabet Inc are expected to account for 69.1 percent.

Yu Sicheng, the head of Alibaba Cloud, said the unit’s strength in China was a significant advantage and a lynchpin in the company’s globalization plans.

“We have the U.S., Europe plus China, which is quite difficult,” he told Reuters in an interview.

The new additions bring Alibaba Cloud’s total number of foreign cloud facilities to eight, surpassing the six within China, though the majority of the company’s data volume remains squarely within China.

It will launch the data facilities through partnerships with Vodafone in Europe, Softbank Group Corp in Japan and YVOLV in Dubai, a joint venture between Alibaba Cloud and Meraas Holdings LLC.

Yu, however, declined to comment on when the unit will likely post a profit, even as it has seen six quarters of consecutive triple-digit growth, to become Alibaba’s fastest growing business sector.

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“Our focus is to keep expanding our market leadership and presence and this is our priority for now,” he said.

(Reporting by Catherine Cadell; Editing by Stephen Coates)