Chinese e-commerce giant Alibaba Group Holding (NYSE: BABA) is investing $1 billion aimed at supporting local talent and start-ups to expand its cloud computing arm Alibaba Cloud in Southeast Asia amid rising competition, as reported by South China Morning Post.
What Happened: Project AsiaForward, as the initiative is named, aims to upskill local developers, small-to-medium-sized companies, and connect businesses with venture capital opportunities, the media company owned by Alibaba reported.
The cloud unit, Alibaba’s second-biggest revenue driver after its core e-commerce business, will also launch its first data center in the Philippines by the end of this year. It has already opened its third data center in Indonesia.
Expanding data centers allows cloud providers to boost their capacity in certain countries or regions.
Alibaba on Tuesday also launched a cloud-based live streaming product designed for online shopping, as per a CNBC report. The platform will allow e-commerce vendors to launch a live stream shopping feature on their websites or apps that are hosted on Alibaba’s cloud.
Vendors this year have been live streaming offers to shore up sales at the ongoing annual mid-year online shopping festival “6.18”. The annual online sales festival will last through June 20.
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Why It Matters: The development comes as Alibaba leaves behind the uncertainty related to China’s antitrust probes. The Jack Ma-led company was fined a record $2.8 billion in April by China’s State Administration for Market Regulation for abusing its dominant market position over forcing online vendors to exclusively use its platform.
Cloud computing is seen as a key profit driver for Alibaba over the long term. The company has in the past few years been boosting presence aggressively outside of China as it faces stiff competition at home from rivals including Pinduoduo Inc (NASDAQ: PDD) and JD.com Inc (NASDAQ: JD).
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Pinduoduo reported a 31% rise in active buyers to 823.8 million in the 12-month period ended March compared with a year ago, more than Alibaba’s 811 million in the same quarter.
In the December quarter, Alibaba Cloud turned profitable for the first time as the COVID-19 pandemic spurred businesses and consumers to go online for work and play.
Price Action: Alibaba shares closed 0.5% lower at $215.82 on Tuesday.
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