Alibaba, the Chinese ecommerce giant, has officially announced its intention to list its cloud computing business, the Cloud Intelligence Group, in an initial public offering (IPO) within the next 12 months. This move comes shortly after Alibaba’s decision to split its operations into six divisions. The company is also planning IPOs for its shopping platform Freshippo and logistics firm Cainiao.
Alibaba’s cloud business has faced some financial instability, with its quarterly revenue for the cloud division only showing a modest 2% increase, falling short of analyst expectations. Despite this, the company remains optimistic about the future of its cloud computing sector and sees potential for significant growth.
Chairman Daniel Zhang expressed his hopes for these divisions to become major players in their respective industries, stating, “We would love nothing more than to see one of these little Alibabas…becoming another big Alibaba, as big as the group company is right now.”
Alibaba faces challenges from the rising competition in the ecommerce sector, with platforms like Pinduoduo and Douyin (known as TikTok outside of China) gaining market share. Additionally, the ongoing COVID-19 pandemic has impacted consumer spending and created a tough economic environment for businesses.
Although Alibaba’s cloud business contributed 9% of the company’s total revenue, generating $2.7 billion in the first three months alone, competition from other major players in the Chinese cloud market, such as Tencent and Baidu, has led Alibaba to reevaluate its strategic approach.
In addition to infrastructure-as-a-service, Alibaba Cloud offers private cloud solutions and artificial intelligence technologies, including its own large language model similar to GPT. However, the company faces tough competition in an industry flooded with similar offerings.
As Alibaba prepares for the IPO of its cloud computing business, the move reflects the company’s determination to navigate through financial challenges and focus on areas where it sees the most potential for growth.
