Alibaba, a Chinese conglomerate, is said to be providing significant price cuts to its cloud clients. These discounts, aimed at customers spanning from the U.S. to Singapore, are a response to the growing demand for cloud services to facilitate artificial intelligence (AI) initiatives, as reported by Bloomberg News on Monday (April 8).
The company has reduced prices by an average of 23% across approximately 500 cloud product features for users in 13 regions, including Japan, Indonesia, the United Arab Emirates, and Germany, as per the statement.
Alibaba CEO Eddie Wu has been spearheading efforts to revamp and modernize the conglomerate’s core business, encompassing a retail segment. Alibaba had previously outlined plans to list its cloud business publicly last autumn.
“In light of the challenges in the current environment, after careful consideration, we have opted not to proceed with a full spin-off of the Cloud Intelligence Group,” Wu remarked.
In a bid to limit Beijing’s access to cutting-edge U.S. technologies that could escalate tensions with Taiwan, the White House declared a halt to shipments of advanced AI products from firms like Nvidia.
Alibaba Chairman Joe Tsai, speaking during an earnings conference, expressed the company’s focus on “cultivating a sustainable growth model centered around the burgeoning demand for interconnected and highly scalable cloud services driven by AI.”
While Alibaba leads the cloud service market in China, it trails behind major players such as Microsoft and Amazon Web Services (AWS) on a global scale. The company has faced challenges in China due to competition from state-backed rivals and global expansion hurdles stemming from China’s tech regulations and U.S. trade constraints.
Despite the cloud division’s revenue exceeding $11 billion in the previous fiscal year, projections indicate a 2% decline in the current quarter. Tsai highlighted that U.S. chip restrictions have posed significant challenges for Chinese cloud enterprises.
To address the chip shortage, the Chinese government will roll out initiatives next month to support domestic AI startups, including offering “computing vouchers” to assist smaller firms in coping with escalating data center expenses.
