Alibaba and JD.com Engage in Aggressive Price Cutting, Intensifying Cloud Services Competition

Alibaba Group Holding Limited 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 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 TCEHY, Baidu Inc BIDU, and JD.com Inc 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. 

Despite losing some clients to competitors, including state-backed firms and newer entrants like Huawei Technologies Co, Alibaba’s latest move in the cloud computing price war, echoed by JD.com’s competitive pricing, underscores the intense rivalry and dynamic nature of China’s tech industry.

Alibaba also remains engaged in its artificial intelligence endeavors to unlock shareholder value as its cloud and logistics unit IPOs succumbed to weakness in the domestic economy.

Investors can gain exposure to Alibaba via Invesco Golden Dragon China ETF PGJ and Tidal Trust II CoreValues Alpha Greater China Growth ETF CGRO.

Price Action: BABA shares traded lower by 1.05% at $73.85 premarket on the last check Monday.

Also Read: Alibaba Revamps Management Team, Aiming for Innovation and Growth Amid Challenges

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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