Alibaba will discontinue its data center operations in India and Australia.

(VOR News) – The Alibaba Cloud (or Aliyun) data facilities in Australia and India will soon be shutting down.

The business issued a statement on its website that read, “As part of Alibaba Cloud’s infrastructure strategy update, we have decided to cease operations at our data centers in Australia and India while enhancing our investment in Southeast Asia and Mexico after careful assessment.”

The two countries’ data centers, in Mumbai and Sydney, are expected to close in July and September, respectively. Data centers in Mumbai will be shut down by July 15th, and those in Australia will be shut down by September 30th.

The corporation had “issued multiple rounds of notifications and technical migration plans to affected customers” since December 2023, according to the notice.

Alibaba has also asked impacted customers to move their data to the Singapore area or another appropriate location as quickly as possible. Analysts believe that customers will not be charged for the move, even though Alibaba did not answer to an email asking for clarification on whether or not these migrations will be paid.

Also, I sent an email asking why the data centers in those two nations shut down, but nobody answered.

Concerns about growth and geopolitical tensions

Possible influences on the decision to shut down operations in both nations include geopolitical tensions and Alibaba’s struggles with the expansion of its cloud business in those two nations.

“Alibaba is closing its operations in these two countries due to the limited business opportunities in these markets,” expressed Rajiv Ranjan, associate research director at IDC.

According to Ranjan, there are a number of factors, including the level of market maturity, that contribute to the limited opportunities for business expansion in these countries.

When it comes to cloud computing, Australia is well-established and has major providers like AWS, Google, and Azure. According to Ranjan, Alibaba’s data center size betrays its restricted operations, and the company’s small client base and lack of operations make it difficult to build a respectable market position.

Contrary to the company’s tradition of building huge data centers, Ranjan explained that the data center in Australia is a colocation facility. This, he added, is also true in India, where the business has two small availability zones in Mumbai. While Google and Oracle are quickly increasing their footprint in the Indian public cloud industry, Azure and AWS remain dominant.

This creates problems for Alibaba, says Ranjan.

According to Jain, the use of Chinese brands is not well-received in both markets, but more so in India due to the stagnation of diplomatic relations between the two countries.

Mexico and Southeast Asia are on Alibaba’s expansion list.

Analysts agree that Mexico and Southeast Asia should be Alibaba Cloud’s primary investment targets.

A stronger brand presence in Southeast Asia has been achieved through Alibaba’s e-commerce operation. Their decision to focus on that sector is a direct result of that, Ranjan noted. To elaborate, Ranjan said that the data localization policy was the impetus for Alibaba to build a second availability zone in India’s data centers in 2022.

The goal of the firm, as Ranjan explained, was to get the most clients possible by using the investment.

In addition to their main client, Paytm, they have clients including Oppo, Vivo, DLF, and Reliance Entertainment in India. But according to Ranjan, their plans for expansion were thwarted since hyperscalers existed.

Alibaba’s public cloud products were on sale for up to 59% off in April. It was seen by analysts as a move to lessen the impact of competition from bigger hyperscalers in nations including the US, UK, UAE, SK, IL, SG, MM, PH, and TT.

The growth of Azure and AWS is expected. Businesses leaving Alibaba Cloud will face higher costs associated with switching to a new cloud provider, says Charlie Dai, a principal analyst at Forrester.

Despite this, analysts said that customers may choose other cloud service providers since they are uncomfortable sending their data abroad. Most of the customers that are going to leave Alibaba Cloud will probably go to Azure or AWS. Ranjan claims that AWS might gain from its Infrastructure as a Service (IaaS) status because it controls 60% of the Indian IaaS market.

Some budget-conscious customers may be interested in Alibaba Cloud because its costs are more in line with those of Google and Oracle, according to the analyst.

Azure and AWS could seem pricey to certain customers. But Azure has raised prices for the first six months of 2024,” Ranjan went on to say.

SEE ALSO:

Under Pressure On Plane Safety, Boeing Is Buying Stressed Supplier Spirit For $4.7 Billion

Canada’s WestJet Cancels 235 Flights After Sudden Mechanics Strike