The WTA made a gutsy call this week to suspend tennis tournaments in its lucrative Chinese market on concerns about the welfare of Chinese player, Peng Shuai who accused a high-ranking CCP official of sexual assault. In contrast, the men’s association, the ATP, released a very bland statement clearly struggling to balance Chinese revenues against human rights. It’s another reminder that although we deal everyday with Chinese goods and businesses, the country remains a different and tricky environment.
Technology research and adoption is key to China’s remarkable development, and it is now one of the global leaders in almost every tech sector. It not only makes many of our phones, computers, servers, headsets, webcams, and consoles, but is at the forefront of developing apps and architecture for them. Yet one area it has struggled for global dominance is cloud computing.
Cloud hosting and provision is a major tech trend, and it’s worth a quick check on the weather up there. The market is dominated by three massive global cloud providers; Amazon (AWS), Microsoft Azure and Google Cloud. AWS is the gorilla - bigger than the other two combined with high-profile clients like Netflix, Spotify and Airbnb. It has over a million customers and powers 700,000 live websites. When just one of its US datacentres went down in February 2017 the US internet virtually ground to a halt with 150,000 sites and services affected (including the SEC). That outage alone proved the need for more big providers; healthy competition would see wider distribution and drive down prices.
But the challenger is China’s Alibaba Cloud (Aliyun). It’s growing rapidly powered by internal demand (nurturing growth in China’s mass of SMBs) and cheaper pricing. You’ll hear it a lot as it sponsors the Paris Olympics in 2024. Aliyun is followed by Baidu Cloud (China’s Google) and TenCent Cloud with similar drivers while other more familiar runners like IBM and Oracle seem unlikely to ever be major challengers. Last week Alibaba reported Q2 revenue +29% at $31.2bn with cloud +33% yoy at $3.1bn; it is still way behind third-placed Google Cloud’s $18.5 bn annualized run rate, but it’s in the race.
The attractions of cloud computing are clear: reduced cost of managing and maintaining IT; scalability and flexibility; easy global collaboration; business continuity and automatic updates. Yet many hesitate to put sensitive data in public clouds; almost all organisations use public cloud and about 80% use private with 78% using a public-private hybrid. That security concern has eased in recent years – “cloud comfort” improving with confidence in the security of the big cloud providers; Amazon’s security spend dwarfing that of its cloud customers.
Businesses now favour multiple cloud providers (three on average), but individual applications are usually still siloed on different clouds (only a fifth use ‘cloud brokering’). Multi-cloud architectures give diversification of technology stacks and choice of cloud-computing service providers according to need. However, they are complex and challenging, requiring multi-cloud management tools and overarching security to cover the increased attack surface.
Cloud computing has grown into a vast and complex global ecosystem of technologies, products, and services. For Alibaba Cloud to elbow its way further into this market it needs international business to trust it with data sovereignty – a very big ask in today’s environment when LinkedIn has now joined Facebook, Google, Twitter, YouTube, Reddit, Zoom, Instagram, WhatsApp, all blocked to users in mainland China. It’s possible we are heading for a divided world of two internets – a US and a separate ‘Sinosphere’ perhaps with very separate clouds. As for Peng Shuai, we really hope she is freely heard from soon. The WTA has made a gallant stand, but sadly it seems the ATP has yet to find its tennis balls.