Tech Transformers

Alibaba expands AI cloud product into Europe to take on Amazon, Microsoft

Alibaba has expanded its big data and artificial intelligence cloud product in Europe in a bid to boost its challenge to the likes of Amazon and Microsoft in the fast-growing space.

The product known as "MaxCompute" handles huge amounts of data allowing organizations to make predictions in real-time. Alibaba Cloud, the cloud division of the Chinese e-commerce titan, claims it can process around a petabyte of data such as video and audio. A petabyte is 1,000,000 gigabytes.

For example in China, the product was used by the Guangdong province to analyze traffic so city planners could make decisions on when to change the traffic lights more efficiently, in real-time. This led to a large reduction in traffic, according to Wanli Min, AI and data mining scientist at Alibaba Cloud.

"With this system, you can prevent the traffic jam from happening in the first place," Min told CNBC by phone.

Alibaba has been expanding its cloud presence beyond China since 2015 by partnering with companies. In 2016, it opened its first data center in Europe, based in Germany.

Offering more services such as MaxCompute is a way for it to get recurring revenues from its customers as well as differentiating itself against the market leaders Amazon Web Services (AWS) and Microsoft.

But both these U.S. tech giants have their own big data and AI offerings. Min said the winner will be the one who shows tangible impact from their technology and Alibaba Cloud has strong AI capabilities.

"The real differentiator who can transform from real time analytics to actionable insight. That transformation who can deliver the tangible impact, that is the key differentiator," Min said.

Alibaba Cloud has not revealed how many customers they have in Europe but said it's in discussions with companies about using ComputeMax. The company did not disclose the pricing for the product, but said customers would pay depending on how much they use.

"I think clearly this technology could be a good partner for some big players in this market," Min said.

Alibaba's cloud business has been growing rapidly. The number of paying customers in the fiscal year ended March 31, stood at 874,000, up from 513,000 the year before. Meanwhile revenue in the same period was up 121 percent to 6.6 billion yuan ($971.5 billion). Cloud is still a small business for Alibaba, however, accounting for just 4 percent of revenues.