Alibaba Expands Cloud Business to UK With New Data Centers

Nate Lanxon and Thomas Seal (Bloomberg) -- The cloud-computing arm of Chinese retail giant Alibaba Group Holding Ltd. opened its first data centers in the U.K., with two sites operational in London.

The expansion is "driven by the rapidly growing customer demand," a spokesman for the company told Bloomberg. "The United Kingdom is one of the fastest-growing European markets for Alibaba Cloud."

Cloud-computing companies have been opening data centers across Europe -- including in the U.K. -- despite the looming uncertainty of Britain’s future relationship with the European Union. The drive is fueled in part by government demands: National authorities have increasingly moved computing functions into the cloud, but for regulatory and security purposes they’re often required to hold data within their national borders.

Started in 2009, Alibaba Cloud has expanded beyond China in a direct challenge to Amazon Web Services, the e-commerce giant’s division that dominates cloud computing. Alibaba Cloud is now the fourth-biggest global provider of cloud infrastructure and related services, behind Amazon.com Inc., Microsoft Corp. and Alphabet Inc.’s Google, according to a June report by Synergy Research Group.

The Hangzhou, China-based company put its first European data center in Frankfurt, in partnership with Vodafone Group Plc in 2016, allowing the mobile carrier to resell Alibaba Cloud services such as data storage and analytics.

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Bloomberg reported in July that the Chinese company had been in talks with BT Group Plc about a cloud services partnership in a move to challenge Amazon’s presence in Europe. A spokesman for Alibaba Cloud declined to comment on its partner for the U.K. launch.

"In line with our Germany data center strategy, we always look for the best-in-market partner for key deployments and this is no different," he said.

The continent has become key to Alibaba Cloud’s success outside China, with prospects in the U.S. made murky by President Donald Trump’s America First agenda. Alibaba pulled back in the U.S. just as tensions with China have escalated under Trump.