How Is China’s Weakening Economy Affecting the Internet Sector?

(Continued from Prior Part)

Tencent competes against Alibaba, Amazon, and Microsoft

Tencent Holdings (TCEHY) recently announced its plans to invest a whopping $1.6 billion in its cloud-computing business over the next five years. Its objective is to enter the cloud-computing market in a big way.

This market is already dominated by players such as Alibaba Group (BABA), Amazon, and Microsoft (MSFT). Tencent plans to invest in building infrastructure, hiring new talent, and building data centers in China (MCHI), Hong Kong, and North America in the coming years.

Most recently, Chinese internet giants have been making investments to expand the cloud-computing business overseas. Alibaba’s Aliyun, its cloud-computing arm, leads the market in China and has set up its first data center overseas in Silicon Valley to target Chinese as well as US clients in the country. Conversely, Aliyun’s rivals Amazon Web Services and Microsoft Azure are working towards increasing their presence in China. Aliyun has a competitive edge over Amazon and Microsoft in China due to its numerous clients and its ties to key government agencies.

Amazon leads key segments in cloud services market

Amazon leads the key segments of the global cloud services market. According to an ITCandor report, and as the chart above shows, Amazon leads the IaaS (infrastructure-as-a-service) and PaaS (platform-as-a-service) markets, the key segments of cloud services. Microsoft, Google, and IBM (IBM) are the three players following Amazon in this market.

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Browse this series on Market Realist:

• Part 1 - Will China’s Slow Growth Affect the Internet Sector?

• Part 2 - Can Alibaba’s Stock Soar despite the Slow Chinese Economy?

• Part 3 - Alibaba Lowers Its Gross Merchandise Volume Estimate