Reports surfaced in March that, Alibaba – along with many other Chinese tech companies – was being targeted by the Chinese government as part of its ongoing anti-monopoly crackdown. However, reports also indicated that Alibaba would likely face no more than a hefty fine. In April, the company was ordered to pay $2.8 billion in fines as well as carry out a comprehensive revamp of operations and submit a “self-examination compliance report” within three years. Following the decision, the company’s stock has gradually been regaining its momentum and aligning with Amazon’s performance.
Given the company’s fiscals, it should come as no surprise that long-time AWS chief Andy Jassy is now at the helm of Amazon after Jeff Bezos stepped down. In fact, shortly after Jassy officially took over in July, the U.S. military’s $10 billion JEDI Cloud contract – allegedly awarded unfairly by former President Trump to Microsoft over Amazon – was cancelled and a new contract being solicited with both Amazon and Microsoft competing for it, leading to Amazon stock price surging upwards.
This story also signifies that e-commerce would likely no longer be the mainstay of Amazon’s growth story. Given the level of competition in the China, Alibaba is going down the same road and will likely continue to burn cash to establish dominance in the “cloud” market. However, given data security concerns on account of it being a Chinese company, it is unlikely that it would find significant footing outside of China.
Within their home markets, however, both companies face stiff competition in their core business – online retail. Stay tuned for Part 2 coming out this Thursday for an overview of key competitors rising against Amazon and Alibaba.
References:
- How many people shop Online in 2021?, Oberlo
- Cloud Computing Market to reach USD 287.03 Billion during 2021-2025 | Market Insights and Forecasts | Technavio, TechNavio
- Cloud services spending jumps by $10 billion in final quarter of 2020, TechRepublic