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November 10, 2016updated 13 Jan 2017 11:44am

‘Data is power’: Is big data Alibaba’s secret weapon in global cloud race?

Data centre expansion plans in Europe will give it a regulatory boost.

By James Nunns

Similarities between Alibaba and Amazon are always likely to be made, but while both operate in the ecommerce market their cloud wings are taking very different approaches.

Alibaba, likes AWS, developed its cloud unit initially as an in-house infrastructure that supports the commerce wings, and in the case of Alibaba its financial units such as Ant Financial Services, before revealing them to the world.

While there are similarities between the origins of the cloud units that is about as far as it goes.

Yeming Wang, Alibaba Cloud Europe, General Manager.

Yeming Wang, Alibaba Cloud Europe, General Manager.

Alibaba Cloud is definitely in its infancy when it comes to Europe and the United States but there are plans afoot to significantly increase the company’s presence.

Yeming Wang, GM, Alibaba Cloud Europe, told CBR: “Since 2015 we started to go abroad, the first thing is to build data centres and so last year we did 4 locations outside of China mainland. Hong Kong, Singapore, America west coast and east coast.

“This year we have another 4 locations to be launched. They are in Japan, Australia, Middle East and the other is in Europe.”

The collocation data centres with a yet unnamed partner highlight one important factor about the company’s cloud unit – it’s going global.

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What will help the cloud expansion is the size of Alibaba and the fact that it already has a considerable cloud presence in China.

Operating since 2009, Alibaba Cloud, formerly known as Aliyun, already has 1.4 million customers while AWS says that it has more than a million users globally of its services.

Alibaba says that it served around 22% of the Chinese Infrastructure-as-a-Service market in the first half of 2014 and has data centre hubs in Beijing, Hangzhou, Qingdao, Honk Kong, and Shenzhen. AWS opened a data centre near Beijing in 2014.

Clearly scale is not going to be a problem for the company, especially with Alibaba reporting Q2 revenue of $5.1bn in the past month.

On 11th November Alibaba holds the 11.11 Global Shopping Festival. It is set to hit over $21bn worth of sales by 40,000 merchants in 24 hours. It is bigger than Black Friday and Cyber Monday combined.

Another boost to Alibaba is that it has a strategic partnership with Intel for custom chips, like AWS, however, Alibaba is also working with ARM to develop software that will get the most out its new chip designs.

However, while the cloud offering may have a firm footing in the Chinese market, it isn’t offering many services to European and US businesses yet and is going much more down the big data route than many of its soon to be competitors.

What the company is doing is to tap into the data from the 450 million subscribers to its ecommerce platforms and in essence offer big data as a service.

The GM said: “Everyone is talking about big data but how do you do that, how do you do better? It sounds easy, just collect data and do some algorithms and use modelling and try to apply the data, but this needs a lot of detailed work and proof.

“Even at Alibaba we claim we are not an ecommerce company we are a data company.

“We are trying to transform and show how to use big data and the power of it. Today data is a power not only oil.”

Alibaba has been working on expanding its ecosystem.

Alibaba has been working on expanding its ecosystem.

The company’s expansion plans currently see it trying to help Chinese companies to do business outside of China, and it is currently supporting some of these using its data centres on the East coast of America.

Once it is able to offering a local data centre in Europe the GM believes that it will then be able to support more local clients and “provide an alternative cloud solution.”

In addition to being a public cloud company it is also a firm believer of hybrid cloud and it is capable of providing its public cloud along with a business’s private cloud.

There’s one very good reason for creating a data centre footprint in the U.S. and in Europe, security.

Public cloud in particular has faced an image problem when it comes to being secure, and that is typically when businesses have been dealing with European and U.S. based cloud companies. For a cloud company to emerge from China and became a viable alternative it needs to prove that is has the credentials to meet customer requirements.

Wang said: “Day by day people realise that security or privacy is a worry for everyone, not only European guys worry about this, Chinese guys also worry about this. In the Chinese market, especially for Alibaba today as a public company, we are very much concerned so that’s why today I say that security has become a strength for Alibaba.”

The GM believes that the company’s past in supporting financial services through Ant Financial Services, and its other financial offerings, put it in a good position to already say that it is capable of meeting all security requirements in Europe and America.

However, he does understand that security will always be a challenge facing the cloud but said that it is more about how the risk is faced.

“It is a matter of how to deal with the risk, frankly speaking it is not about the risk itself because if you want to enjoy the cloud service you have to face the challenge of privacy and security. They will always go together. If you go to the internet you have the risk of being hacked.

“It is not the risk itself that is a problem it is how to deal with that. So we think that our task for Alibaba cloud is to guarantee the security we have to be very compliant with each countries laws and regulations and requirements.”

The market should expect to see more data centre expansion, if the business case is there.

Wang said: “This is very much business driven, but from the first day we have to start with one then we will plan a second one and so on, it really depends on our business.”

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