Alibaba's cloud growth outpaces AWS, Microsoft, and Google Cloud

Revenues for the Chinese giant's cloud business increased 60% year-on-year in Q3

A view of Alibaba's headquarters in China

The growth of Alibaba's cloud business is outpacing both AWS and Microsoft in the third quarter of 2020, with the Chinese firm capitalising on the country's early recovery from the pandemic.

Alibaba's cloud division brought in revenues of 14.89 billion yuan (£1.71bn) in the three months ending 30 September. That's a 60% increase year-on-year, representing faster growth than the 29% recorded by AWS and the 48% cited by Microsoft's Azure. 

That was also higher than the 44.7% growth recorded by the third biggest provider, Google Cloud.

It's worth noting that Alibaba is a smaller operation that doesn't provide the same breadth of cloud services as the three larger companies and its business is mostly in China, despite recent expansion into Europe.

The company said that most of the gains were from its internet, finance, and retail businesses, although part of it can also be attributed to China's earlier recovery from the COVID-19-related downturn.

"We delivered another solid quarter," said Maggie Wu, Alibaba's CFO, in the earnings report. "Our domestic core commerce business continued to grow steadily during the post-COVID-19 environment in China through higher purchase frequency and consumer spending, while cloud computing revenue grew 60% year-over-year, driven by the acceleration in digitalisation across all industries and businesses of all sizes in China.

"We are happy to see that our strategic investments are starting to see improving operational efficiencies and the effect of scale."

Amazon and Microsoft are currently the outright leaders in cloud, between them accounting for over half of the worldwide market, according to Synergy Research Group. Alibaba is now the fourth-largest provider of cloud services, behind Google but ahead of the likes of IBM and Oracle.

"We remain focused on our three long-term growth engines – domestic consumption, cloud computing and data intelligence, and globalisation – to effectively capture opportunities from the ongoing changes in consumer demand and acceleration of digitalisation of businesses across our digital economy," said Alibaba CEO Daniel Zhang.

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