Alibaba and JD.com Engage in Aggressive Price Cutting, Intensifying Cloud Services Competition
Alibaba Group Holding Limited (NYSE:BABA) initiated a significant price reduction strategy in the cloud computing services sector, slashing prices by up to 55% on more than 100 services to regain market share in a highly competitive environment.
This move prompted an immediate response from JD.com Inc (NASDAQ:JD), a key competitor in both e-commerce and cloud services, which announced its price cuts on the same day through its WeChat account.
The price war between these tech giants signals an aggressive competition phase, likely to benefit customers but at the expense of the companies’ profits, Bloomberg reports.
Alibaba’s aggressive pricing strategy is part of a broader effort to combat rivals like Tencent Holdings Ltd (OTC:TCEHY), Baidu Inc (NASDAQ:BIDU), and JD.com Inc (NASDAQ:JD), especially after the company reversed its decision to spin off its cloud business into an independent entity last year.
Under the leadership of CEO Eddie Wu, Alibaba is concentrating on expanding its public cloud services, targeting enterprise customers within China amidst challenges like US sanctions affecting the supply of advanced chips to Chinese firms.
This focus is crucial as Alibaba aims to rejuvenate growth following a period marked by regulatory challenges and the impact of the COVID-19 pandemic on its diverse business segments, including e-commerce, logistics, and cloud computing.
