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Tencent’s $1.6B plan to take on Alibaba, Amazon in cloud

Brent Lewin | Bloomberg | Getty Images

Chinese internet giant Tencent plans to invest 10 billion yuan ($1.57 billion) in its cloud-computing business over the next five years in a bid to challenge rivals Alibaba, Amazon and Microsoft in the rapidly-growing area.

The money will go into infrastructure, operations, hiring talent, and marketing its services, Dowson Tong, senior executive vice president of Tencent, said at an industry forum on Tuesday.

Tencent operates a range of online businesses from messaging services to news-aggregating websites and is one of China's biggest Internet players along with Alibaba and Baidu. Tencent will invest 2 billion yuan in 2016 alone, with the aim of building data centers in China, Hong Kong and North America over the next few years.

Tencent's announcement marks its biggest push into cloud computing yet and will see it also compete against Amazon with its Amazon Web Services division, Microsoft and Google.

Chinese Internet companies have been shoring up investment in cloud computing, one of the fastest-growing but still small areas of their businesses. E-commerce giant Alibaba recently picked Singapore as the base for its international cloud expansion and earlier this year said it planned to open up a data center in Silicon Valley.

Alibaba and Tencent have existing customers in China running services on their cloud, but analysts said that the companies were now looking global.

"Tencent, Baidu and Alibaba are all on a mission to expand into worldwide platforms. The opportunity for them is much bigger than China, although China is very large," Martin Garner, senior vice president at CCS Insight, told CNBC by phone.