Alibaba, the Chinese tech giant, has announced that it will not spin off its Cloud Intelligence business sector. The decision comes as a result of limitations imposed by the US government on the import of cloud computing and artificial intelligence […]
Alibaba, the Chinese tech giant, has announced that it will not spin off its Cloud Intelligence business sector. The decision comes as a result of limitations imposed by the US government on the import of cloud computing and artificial intelligence (AI) technology into China.
In a statement, CEO Eddie Wu said, “Given the uncertainty in the current environment, we have decided not to proceed with a complete spin-off of the Cloud Intelligence group. Alibaba will continue to invest strategically in the Cloud Intelligence group on a long-term basis. At the same time, the Cloud Intelligence group will maintain independent operations under the leadership of its CEO and oversight by its directors.”
It is important to note that the White House announced last month that it would halt shipments of advanced AI chips designed by companies like Nvidia to China, with the aim of reducing Beijing’s access to cutting-edge US technology and bolstering its military capabilities.
Keeping this in mind, Alibaba’s President, Joe Tsai, informed analysts that the company will instead focus on “developing a sustainable growth model based on the growing demand for connected AI and highly scalable cloud computing services.”
Eddie Wu added that this quarter has seen a boom in artificial intelligence, creating a growing demand for computing power and large-scale services.
“Cloud computing is the infrastructure of the digital economy,” Wu said. “It is a business model that achieves network effects with computing resources and a service model that encompasses both network and economies of scale effects.”
Furthermore, Wu stated that investments in IT will exponentially increase in the era of artificial intelligence, and the demand for cloud computing will also grow exponentially, creating tremendous additional opportunities.
During the September quarterly earnings call, the CEO stated that disruptions brought about by AI will bring about the “most significant change” in the next 10 years across all industries.
To highlight its commitment to artificial intelligence, Alibaba has announced plans for strategic investments in AI-driven technology companies, internet platforms, and a global trading network.
Revenue for this quarter shows that Alibaba’s cloud business revenue increased by 2%, while the company’s total revenue grew by 9% compared to the previous year. Simply put, the cloud sector is the largest cloud service provider in China and was initially planned to be spun off as part of the company’s broader restructuring.
Alibaba announced in March that it would become a holding company and divide its various sectors into six different businesses, focusing on areas such as cloud, media, and logistics.
1. Will Alibaba still spin off its Cloud Intelligence business sector?
No, Alibaba has decided to retain its Cloud Intelligence business sector.
2. What influenced this decision?
The decision was announced as a result of limitations imposed by the US government on the import of cloud computing and artificial intelligence technology into China.
3. What are Alibaba’s plans regarding the development of artificial intelligence?
Alibaba will instead focus on developing a sustainable growth model based on the increasing demand for connected AI and highly scalable cloud computing services.