Alibaba Group Ltd. is planning a US$1 billion war chest to battle Amazon.com in cloud-based services.
The Chinese e-commerce giant said part of the money will go into data centers in the Middle East, Japan and Europe.
The Wall Street Journal is reporting that Alibaba’s cloud-computing unit, Aliyun, which opened its first overseas data center in Silicon Valley earlier this year, is expanding into the US east coast.
The money will also be used to expand and support Alibaba’s network of technology and telecommunications partners which includes Intel Corp. and Singapore Telecommunications Ltd., the company said.
“This additional US$1 billion investment is just the beginning,” Alibaba chief executive Daniel Zhang said in a statement.
Most of Aliyun’s global customers are Chinese companies operating outside the mainland, Aliyun president Simon Hu said last week.
Hu said Aliyun aims to become serious competition for Amazon.com Inc.’s cloud-computing unit, Amazon Web Services.
“We see that Amazon took 10 years to get to where it is today,” Hu said.
“Aliyun is just past its sixth year and we hope to match or outperform Amazon within three or four years.”
Amazon Web Services reported second-quarter sales of US$1.82 billion, up 81 percent from a year earlier, accelerating from 49 percent in the first quarter.
Operating profit was US$391 million, five times the year-earlier US$77 million.
Alibaba has yet to report its results for the latest quarter but cloud computing revenue for the quarter ending in March was 388 million yuan (US$63 million), up 82 percent from a year earlier.
The company says that as of the end of June 2014, 1.4 million customers were using Aliyun services directly or through independent software vendors.
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