Chinese e-commerce giant Alibaba has extended its cloud offerings to the Middle East, and taken its competition with Amazon Web Services (AWS) to a new continent, with a joint venture in Dubai.

Alibaba’s cloud subsidiary Aliyun has signed an agreement with Dubai-based Meraas Holding to set up an IT company which will provide cloud-based system integration services to enterprises and government bodies in Middle East and North Africa. Meraas operates in sectors including tourism, leisure, real estate, development and asset management in both United Arab Emirates and abroad.

The joint venture will build a data center in Dubai, which will be Aliyun’s seventh worldwide, and only its second outside China. In March the cloud provider opened a data center in California’s Silicon Valley, aiming to compete with AWS, Microsoft and Google. 

Alibaba founder and chairman Jack Ma

Smart City

The new Dubai data center will be ready in time to support the 2020 World Exposition which will be held in Dubai. It will also support Dubai’s Smart City Initiative, serving transportation, communication, urban infrastructure, electricity, economic service and urban planning, said Meraas Holding’s chair, HE Abdullah Al Habbai. 

“We are moving from the IT Era to the Data Era. By taking advantage of Dubai’s advanced infrastructure and economic strength, as well as Alibaba’s technical expertise, we will be able to provide infrastructure to entrepreneurs and stimulate innovations,” said Jack Ma, the founder and chairman of Alibaba Group.

In the last quarter of 2014, cloud and infrastructure was Alibaba’s fastest growing business, expanding at 85 percent to a sales volume of $58m,

Like Amazon, Alibaba is now listing cloud as an independent business item in its reports, and in the Group’s recently-released first quarter figures it accounted for two percent of the Group’s quarterly revenue.

We will provide infrastructure to entrepreneurs and stimulate innovations 

Jack Ma

Aliyun dominates China’s cloud market with a 23 percent market share, but is sparing no efforts to expand overseas, Earlier this year, it launched a data center in Silicon Valley in the USA, showing its resolve to compete directly with the country’s cloud giants including AWS, IBM and Microsoft. The Silicon Valley site, built in accordance with Tier III+ standards, will firstly serve Chinese companies developing businesses in America, followed by American companies that aim to develop businesses in both countries.

Aliyun’s new move is into the Middle East and North Africa market - a decision made after several inspection trips. Last year, Dubai was one of the destinations for Alibaba’s global IPO road show, and in September, Jack Ma met with Sheikh Mohammed, the Vice President and Prime Minister of UAE and emir of Dubai for discussing cooperation issues in electronic and high-tech fields.

Alibaba Group Headquarters
Alibaba Group Headquarters

The Middle East and North Africa market is very promising as well. According to the global research company IDC, in 2015 the IT expenditure of the Region will reach $27bn with a growth rate of 9%, ranking second globally. Aliyun’s partnership with Meraas for setting up a new company and building a new data center in Dubai is the very move to capture such opportunities presented by this market.

Yet, this is not the end to Aliyun’s ambitious overseas expansion plan. Relevant source said the company has confirmed a data center in Germany for serving the whole European region. In an interview with China Business News, Xioming Hu, President of Aliyun said his company is preparing to launch a data center in Japan and Singapore respectively, and it is estimated that by the end of 2015, Aliyun will have 12 data centers globally, half of which will be located overseas.

By that time, Aliyun will complete its deployment in North America, Europe, East Asia, Southeast Asia, Middle East and North Africa, covering all the major regions except South America, Africa and Oceania.

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