Alibaba Plans To Invest $28bn Into Cloud Computing To Handle Extra Traffic

Alibaba has vowed to spend 200 billion yuan ($28 billion) over the next three years in its own cloud computing network — roughly half of the company’s revenue from the last fiscal year. 

The Chinese tech giant will use the cash to build more data centers, reports from Bloomberg, as well as fund supporting software internal production such as AI accelerator chips, and semiconductors.

Alibaba’s network has reportedly struggled with the traffic associated with the tight lockdown measures imposed in February by China’s coronavirus (COVID-19).

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The organization said it’s hoping the cash would “accelerate the recovery process” for its pandemic-affected companies.

In reality, COVID-19 has probably ruined the retail businesses, including Tmall and Taobao, which make up a huge chunk of Alibaba’s total revenue.

According to the Financial Times, as a whole, the amount of money that passed through these units in the first quarter of 2020 was projected to decline after rising annually for years by more than 30 per cent. 

Even reportedly, regular sales for major brands widely sold through Alibaba, such as Estée Lauder and Uniqlo, dropped between 40 and 80 percent compared to January to February 2019.

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Reuters, on the other hand, states that Alibaba’s cloud division is one of its fastest growing, with its revenue reaching 10.7 billion yuan ($1.51 billion) in the fourth quarter of last year for the first time ever.

Market data at the time showed Alibaba dominated over 46 per cent of the entire Chinese cloud computing market — let’s see what another $28 billion does to that sum.