(Bloomberg) — Alibaba Group Holding Ltd. is slashing prices for its cloud services for the second time in recent years, as Tencent Holdings Ltd. competes to provide essential tools for training artificial intelligence. The company aims to win back users from rivals like .
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The Chinese internet pioneer will cut prices on a number of its internet-based services by up to 55% and an average of 20% starting Thursday. Alibaba executives told reporters in Beijing that the discounts cover more than 100 products, including data storage and elastic computing options that enable online processing power for customers.
The job cuts mark one of Alibaba's more aggressive moves to stay ahead of Tencent and Baidu in its cloud business. The plan comes after Alibaba halted a spinoff and initial public offering of its once fast-growing division, a move that surprised investors who had hoped to buy into a key business critical to AI development. . Following the news, Alibaba shares fell 2.3% in Hong Kong, their biggest decline since February 9.
The company is now focused on growing its public cloud, its domestic services division for enterprise customers, as U.S. sanctions limit the supply of advanced chips to Chinese companies. Chief Executive Officer Eddie Wu took direct charge of the division and revamped key lines.
“Therefore, we have launched a price reduction campaign to lower the threshold for cloud services and help more enterprises and developers enjoy the technological benefits and accelerate the adoption of advanced public cloud services,” said Liu Weiguang, president of the division. I decided to do it,” he said. The public cloud division said in a statement:
Alibaba has struggled over the past year to revamp its vast e-commerce, logistics and cloud empire in the face of fierce competition and geopolitical risks. The company is aiming to return to growth after two years of regulatory scrutiny and coronavirus-era economic turmoil. The company is trying to assemble non-core assets to raise capital, while also trying to divide its vast business into more clearly defined areas.
But the cloud – a business born more than a decade ago out of the need to support large e-commerce operations – remains a focus.
Last April, the company announced it would cut the cost of Alibaba Cloud's core products from 15% to 50%, a move that leverages the demand for raw computing power needed for AI models such as Alibaba's own Tongyi Qianwen. This is a movement aimed at. The previous round of discounts raised concerns that rivals such as Tencent and Baidu would follow suit, eroding margins across China's internet industry.
Read more: Baidu falls by the most since 2022 as AI spending erodes profits
Thursday's reduction will be applied retroactively to customers who renew their orders for discounted products for at least one year within the next three months for the remainder of previously purchased undelivered cloud resources.
The price cuts by China's largest cloud provider are also aimed at attracting long-term customers, including special discounts on five-year plans. Free storage for consumers will also double from 10GB to 20GB.
Alibaba executives emphasized that the discounts will open up more opportunities, especially for small and medium-sized enterprises. The company has backed startups such as Zhipu and Moonshot AI, which are developing generative AI platforms to compete with sector leaders such as Baidu. China's internet search leader reported disappointing results on Wednesday, hurt in part by soaring AI development costs.
–With assistance from Vlad Savov.
(Updates share action and comment from second paragraph)
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