Alibaba Cuts China Cloud Prices to Rekindle Division's Growth

By Tracy Qu

Alibaba Group will cut cloud product prices in China by up to 55% in an effort to boost a promising division whose sales have slowed in recent quarters amid rising competition.

The new prices, down 20% on average, will take effect Thursday and cover more than 100 product specifications under Alibaba Cloud's elastic compute service, object storage service and database product categories, the division said in a statement.

The cuts in China mark the second time in less than a year that Alibaba Cloud has lowered product prices on a large scale. It reduced cloud prices by as much as 50% last May.

Alibaba's revenue from cloud services, considered one of the Chinese e-commerce giant's most promising businesses, has slowed in recent quarters. Cloud sales grew about 3% from a year earlier in the three months ended December, down from 20% in the same period in 2021.

Cloud infrastructure services spending in China rose 18% in the third quarter of 2023, according to Canalys estimates. The market research company said Alibaba Cloud is the market leader, followed by Huawei Cloud and Tencent Cloud.

Alibaba shares were 2.1% lower at the midday break in Hong Kong.

Alibaba had planned to spin off its cloud unit when the company announced a restructuring plan last year. Chairman Joe Tsai later said the plan might not benefit shareholders, citing the effects of U.S. export restrictions on advanced computing chips.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

February 29, 2024 00:06 ET (05:06 GMT)

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