Alibaba to invest $28 billion in cloud services after coronavirus boosted demand

FILE PHOTO: A emblem of Alibaba Group is seen on the firm’s headquarters in Hangzhou, Zhejiang province, China, November 18, 2019. REUTERS/Aly Track/File Photograph

SHANGHAI (1) – Alibaba Group Holding Ltd (BABA.N) mentioned it should invest 200 billion yuan ($28 billion) in its cloud infrastructure over three years – a plan that follows a increase in demand for enterprise software program because the coronavirus outbreak peaked in China.

The corporate mentioned in a press release it should spend the funds on semiconductor and working system growth in addition to constructing out its information centre infrastructure.

Whereas most of China’s white collar staff have been working from dwelling all through February, the nation’s dominant cloud participant noticed utilization surge for its software program, most notably DingTalk, a office chat app utilized by each companies and colleges.

At one level, customers complained of lags on the app due to the excessive quantity of exercise. The corporate acknowledged the problems on Weibo, the Chinese language social networking web site.

Alibaba Cloud Intelligence president Jeff Zhang mentioned in the assertion that the COVID-19 pandemic “has posed further stress on the general economic system throughout sectors” and the corporate hoped the funding would assist companies “velocity up the restoration course of”.

Alibaba’s cloud division is one in all its quickest rising companies. Fourth-quarter income climbed 62% to 10.7 billion yuan, the primary time it has topped 10 billion yuan in a single quarter.

The tech large commanded 46.4% of China’s cloud market in the fourth quarter, in accordance to analysis agency Canalys. Tencent Cloud and Baidu Cloud, which have additionally seen demand for his or her merchandise surge, had 18% and eight.8% of the market respectively.

Throughout the first quarter, Alibaba’s cloud unit additionally aided the Hangzhou authorities in creating and rolling out a digital health-monitoring system that charges one’s publicity to the virus utilizing pink, yellow, and inexperienced color codes. The system was later rolled out nationwide.

Reporting by Josh Horwitz; Modifying by Edwina Gibbs

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