This article was published on April 20, 2020

Alibaba to pump $28 billion into cloud computing to handle coronavirus traffic

That's half of Alibaba's revenue from last year

Alibaba to pump $28 billion into cloud computing to handle coronavirus traffic

Alibaba has pledged to invest 200 billion yuan ($28 billion) in its own cloud computing infrastructure over the next three years — roughly half the company’s revenue from the last fiscal year.

The Chinese tech giant will use the cash to build more data centers, Bloomberg reports, as well as fund internal development of supportive tech like AI accelerator chips and semiconductors.

[Read: Online marketplaces are tanking worldwide – except for Amazon]

Alibaba’s infrastructure reportedly struggled with the traffic associated China’s strict coronavirus (COVID-19) lockdown measures imposed in February.

The company said it hopes the cash will “speed up the recovery process” for its businesses negatively affected by the pandemic.

In fact, COVID-19 has likely wrecked the retail businesses that make up a huge chunk of Alibaba’s overall revenue, like Tmall and Taobao.

As a whole, the amount of money that flowed through these units in 2020’s first quarter was expected to shrink after growing annually by more than 30% for years, noted the Financial Times.

Daily sales for major brands commonly sold via Alibaba, such as Estée Lauder and Uniqlo, also reportedly fell between 40 and 80% when compared with January to February 2019.

On the other hand, Reuters notes that Alibaba’s cloud division is one of its fastest growing, with its revenue breaking 10.7 billion yuan ($1.51 billion) for the first time ever in last year’s fourth quarter.

At the time, consumer data showed Alibaba controled more than 46% of the entire Chinese cloud computing market — let’s see what another $28 billion does to that number.

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