Alibaba cuts Cloud prices to spur growth before possible IPO

Alibaba Group Holding is cutting the cost of its cloud services by as much as half, a move that could win users from rivals such as Tencent Holdings at a time it’s considering spinning off the fast-growing Aliyun business.

Alibaba and Tencent are vying to provide the raw computing power needed to train generative artificial intelligence models such as OpenAI’s ChatGPT, which has ignited a global race.

Core products of the Aliyun subsidiary will see 15% to 50% cuts from May 7, an Alibaba spokesperson said on Wednesday.

The company has said it’s committed to expanding its cloud business, now led by group Chief Executive Officer Daniel Zhang, which it sees as a potential driver of exponential growth.

Alibaba’s Tongyi Qianwen AI model, announced earlier this month, is already in demand by Chinese businesses.

The Hangzhou-based company has received more than 200,000 requests from businesses to join its beta testing program, from industries as varied as fintech, electronics, transport, fashion and dairy farming.

It sees the hand-in-hand provision of AI and cloud infrastructure services as a winning formula for wooing a large swath of the domestic market.