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Alibaba has pledged $1 billion to cloud computing customers to restart growth

by SuperiorInvest

Alibaba faces challenges to growth due to tightening regulatory measures in China’s domestic technology sector and a slowdown in the world’s second-largest economy. But analysts believe that the growth of the e-commerce giant could accelerate until the end of 2022.

Quang Da | Jiemian News | VCG | Getty Images

Alibaba said it will invest $1 billion over the next three fiscal years to support its cloud computing customers as the Chinese e-commerce giant looks to restart growth after a historic slowdown.

The investment consists of “financial and non-financial incentives such as financing, discounts and go-to-market initiatives,” Alibaba said in a press release Thursday.

The company said it is also developing a program to help its customers locate their cloud computing business needs depending on the market.

Alibaba is the world’s third largest cloud computing player Microsoft and Amazon, according to Gartner. While cloud computing is currently a small part of Alibaba’s overall business, the company’s management sees it as a a key component of future growth and profitability.

But Alibaba has seen an unprecedented slowdown in growth amid China’s economic malaise due to a resurgence of Covid in the world’s second-largest economy and a tighter domestic regulatory environment. In the quarter from April to June Alibaba reported its first stagnant sales growth in history.

Cloud computing revenue growth also slowed from the previous quarter.

Alibaba’s investment announcement is also part of a broader effort by the Hangzhou, China-based company to expand its cloud computing business overseas.

Over the past few years, Alibaba opened new data centers outside of China to acquire customers in other markets such as Singapore and Thailand.

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