China’s internet giant Alibaba is putting on hold its plans to expand its cloud business in the U.S., people familiar with the matter said, after its initial efforts to take on Amazon Web Services and other big players didn’t live up to its expectations. The company also feared that an aggressive strategy would provoke a backlash in Washington at a time of heightened regulatory scrutiny of Chinese businesses in the U.S.
Alibaba moved into the U.S. cloud market in 2015 with an eye toward grabbing market share from AWS, Google Cloud and Microsoft Azure, offering deep discounts to entice customers to switch services. But the cloud unit has stopped competing aggressively against its big U.S. rivals, one of the people said. Instead, the company’s U.S. arm plans to prioritize the narrower market of U.S. multinational companies that need cloud services in China, according to people familiar with the matter.