Alibaba: Microsoft, Amazon are friends—not rivals

Amazon and Microsoft are "friends" not rivals of Alibaba in the cloud computing space, a top exec at the Chinese e-commerce giant told CNBC.

The comments come just a few days after Alibaba opened a data center in Silicon Valley—its first on U.S. turf in a cloud market dominated by Amazon, Google and Microsoft.

But Ethan Yu, the international head of Alibaba's cloud division, Aliyun, told CNBC that the company was not in competition with its U.S. counterparts.

"The public cloud business is growing exponentially. There is just huge room for everyone to grow. We are trying to position differently from our friends in this area. We would not call them competitors," Yu said in an interview at tech trade fair CeBit, in Hanover, Germany.


'Great attention’ to US

Alibaba's cloud computing business accounts for just 1 percent of the company's total revenue, brining in $58 million for the New York-listed technology giant in the three months to December, according to a results filing.

This represented 85 percent year-on-year growth in the division, highlighting the rapid expansion of cloud services for Alibaba.

Alibaba banners and the Chinese flag outside the New York Stock Exchange on the day of the company's initial public offering.
Adam Jeffery | CNBC
Alibaba banners and the Chinese flag outside the New York Stock Exchange on the day of the company's initial public offering.

Alibaba has four data centers in China, one in Hong Kong, and one in the U.S. Yu would not reveal where the next one would open but said the company had its eye on the American market.

"The U.S. customer is one of the customers that we pay great attention to. The physical location of customers does not matter, what matters is where exactly our customers put their servers to service their own customers," Yu told CNBC.

The Silicon Valley data center will allow Chinese companies to get a foothold on U.S. soil, but also let American firms tap customers in the world's second-largest economy.

Big Data

Similarly to its competitors, Aliyun cloud provides services such as storage space for companies and protection against cyberattacks. Where Yu thinks Aliyun is different is its ability to handle "big data."

Yu said Singles' Day in November, China's equivalent of Cyber Monday, showed how Aliyun could process and analyse large swathes of data. In 2014, Alibaba sales topped $9 billion on Singles' Day. Aliyun is the cloud service behind Alibaba's e-commerce platforms such as Taobao and Tmall.

"This is very key to not only Alibaba as a group, but Aliyun as a business," Yu said, adding that Aliyun lets businesses analyze large amounts of data that they "can't explore with traditional IT systems".

Alibaba has previously said it would expand Aliyun into Southeast Asia and Europe, but a further push into the U.S. would make sense, according to analysts.

"I think Alibaba is scaling to be a worldwide player," Martin Garner, senior vice president at CCS Insight, told CNBC by phone.

"When we look at Amazon's cloud growth it is mostly in the U.S. The share of the business outside the U.S. is much smaller so it's understandable Alibaba would go there first."