Alibaba Cloud announced that it will be committing a $1 billion investment in a “global partner ecosystem upgrade.” The funds are meant to boost offshore business ventures with their partners. Alibaba Cloud has become the world’s third-largest public cloud provider which is incorporated with an established network of partners worldwide. Cloud service has also been one of the biggest contributors to their revenues in recent years.
The $1 billion pledge is meant to support partners that the company has recruiting to take on responsibilities such as sales, technical support, and customer services. The funds will also be put into technology innovation and expansion for three years “support partners’ technology innovation and their market expansion with Alibaba Cloud in the coming three fiscal years,” the company said. The money will come in both financial and non-financial incentives, including funding, rebates and go-to-market initiatives.
Alibaba Cloud boasts of a 9.5% market share in 2021, trailing Microsoft (21%) and Amazon (39%), according to market research firm Gartner. The company has about 11,000 partners globally, including Salesforce, VMware, Fortinet, IBM and Neo4j.
Rising national security restlessness between China and the West has has caused a shift of customers away from its cloud platform. This resulted to TikTok reportedly migrating from Alibaba Cloud moving all its U.S. data to Oracle servers in a race to win over U.S. regulators. Start-Ups in China are also joining TikTok’s train by opting to store all their offshore user data on foreign cloud services to avoid regulatory woes. It however remains the main cloud service solution for many Chinese enterprises venturing abroad.
Alibaba Cloud noted in its June earnings report that it has recently suffered from slowing growth and the loss of one key cloud client, speculated to be ByteDance;
“Year-over-year revenue growth of our Cloud segment reflected recovering growth of overall non-Internet industries, driven by financial services, public services, and telecommunication industries, partly offset by decline in revenue from the top Internet customer that has gradually stopped using our overseas cloud services for its international business due to non-product related requirements, online education customers as well as softening demand from other customers in China’s Internet industry.”
The same has also been happening to Western tech firms like Apple and Tesla in China, as their regulations barres user data from leaving its borders.