Alibaba’s cloud computing arm is reportedly lining up a deal with the IT consulting wing of BT (formerly British Telecom) to potentially set up a heavyweight bout against Amazon Web Services (AWS) for cloud services leadership in Europe.
BT has confirmed that is talking with Alibaba Cloud but did not provide any additional details. Alibaba apparently had nothing to say, according to a Bloomberg report.
Were such an arrangement come to pass, it could benefit BT’s cloud services and data center infrastructure business, an integrated suite of cloud computing, storage, networking, security, big data and artificial intelligence solutions sold to online businesses and Alibaba’s own ecosystem. In the wider view, it might also portend future agreements by telecoms with cloud service providers. AWS, for example, last year struck agreements with telecoms AT&T and Verizon.
Alibaba Cloud vs AWS: Keeping Score
AWS now accounts for roughly 40 percent of the global market within the public cloud and holds clear leadership positions in all four geographic regions, researchers say. However, despite trailing the top five cloud providers in Europe, Alibaba seemingly is maneuvering itself into making a run at AWS in the region. While it lurks behind the global leader in fourth place worldwide, it has climbed into second place in Asia Pacific, according to analyst Synergy Research.
Along the way, Alibaba has picked up a head of steam, perhaps already setting in place the necessary pieces to make a move in Europe. The Chinese e-commerce conglomerate has an existing partnership with telecom Vodafone in Germany, earlier this year opening its first European outpost with a data center in Frankfurt, Bloomberg reported. And, earlier this month, Alibaba set up shop in France with a deal to provide Bollore SA, a transportation and communications firm, with solutions in cloud computing, big data, artificial intelligence, content delivery and security. It concurrently announced its EMEA ecosystem partner program aimed at solidifying relationships with its customers and partners in the region. Early adopters include big timers Accenture and Intel.
Alibaba Cloud and U.S. Political Hurdles
What's holding Alibaba back from challenging AWS in the U.S., especially considering North America dominates the cloud services worldwide market? Blame politics. Bloomberg reported that rather than buck the Trump administration's America first policy, Alibaba has instead pared its U.S. operations.
Earlier this year, BT laid off 7,000 workers and lost its CEO as its services business tumbled by nine percent. Maybe Alibaba can help it do better. Nevertheless, a deal with Alibaba would face oversight from U.K. regulators owing to BT’s position as the backbone of Britain's nationwide communications network, Bloomberg reported. BT has existing cloud services arrangements with AWS, Microsoft and Cisco.