Chinese crackdown on tech giants threatens its cloud market growth – TechCrunch

As Chinese tech companies come under regulatory scrutiny at home, there is growing concern and pressure among investors and local tech companies, including China’s four largest cloud companies, BATH (Baidu AI, Alibaba Cloud, Tencent Cloud and Huawei Cloud).

Despite a series of mistrust and Internet-related regulation crackdowns, the four leading cloud companies continue to grow. With current testing not particularly focused on the cloud sector and demand for digital transformation, artificial intelligence and smart industries remaining strong, China’s cloud infrastructure market has grown to કદ 6.6 billion, an increase of 54% over the previous year. In the quarter.

However, shares of three of them – Baidu, Alibaba and Tencent – have fallen between 18% and 30% in the last six months, prompting investors to be wary of betting on Chinese tech companies.

“Chinese tech companies can always rely on their domestic market, especially when access to lucrative western markets is blocked. But the rise in domestic regulatory pressure over the past nine months has been disappointing for companies that have seen their cloud business grow significantly over the years.

The four major cloud titans dominate the Chinese cloud market, accounting for 80% of total cloud costs. Alibaba Cloud maintained its lead position with 33.8% market share in the second quarter of this year. Huawei, which had a 19.3% market share of China in 2Q21, is the one that has so far avoided regulatory measures.

“Huawei is an infrastructure and device company that has also developed a strong cloud business. When it comes to cloud infrastructure, we focus on BATH companies, not just BAT.” To be in a strong position, especially in the public sector where it has a good position and long-term relationship with the government.

While Chinese regulators are intensifying their scrutiny of technology companies, the crackdown is wreaking havoc on its own markets and shares of China-based companies.

Beijing passed a data security law in June that went into effect in early September to protect critical data related to national security, and in late August drafted a roadmap to regulate algorithms targeting Bitdance, Alibaba Group, Tencent and DD and others.

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