For a while now, several Chinese tech companies have been facing significant regulatory scrutiny at home, with investors raising concerns over the monetary repercussions of the crackdowns. This predominately involves China’s four major cloud companies namely, Alibaba Cloud, Baidu AI, Huawei Cloud, and Tencent Cloud, which could further inhibit the country’s cloud market growth.

The cloud majors currently account for 80% of total spending in China’s cloud infrastructure market. These titans have been showing steady growth despite the continuous antitrust and other regulatory crackdowns.

If market speculations are right, China's cloud infrastructure market size was valued at USD 6.6 billion in the second quarter of 2021, which is a whopping 54% increase as compared to the previous year. This can be attributed to the growing demand for AI solutions, smart industries, and digital transformation.

Amid these trends, Alibaba managed to hold a 33.8% market share during the second quarter of this year. Huawei, which has been avoiding additional regulatory measures, captured 19.3 market share during the same timeframe.

Some experts believe that Huawei is essentially an infrastructure and device firm that has also extended its reach in the cloud business. The company’s long-term relationship with the government in terms of the public sector should help it in avoiding China’s regulatory scrutiny.

It is also worth noting here that Chinese tech companies have long relied on the local market, especially when access to the Western markets was blocked last year.

However, the rising domestic regulatory pressures in the recent past have put significant pressure on the four titans that have seen their cloud business grow substantially over the years. Even the shares of Baidu, Alibaba, and Tencent have dropped between 18% and 30% since the past six months.

Meanwhile, China intends to intensify its tech crackdown, with Beijing introducing a Data Security Law that reportedly could help in protecting critical information related to national security. The government has also issued a guideline on regulating the algorithm companies, including DiDi, Tencent, Alibaba, and ByteDance.

Source Credits –

https://techcrunch.com/2021/09/13/chinese-crackdown-on-tech-giants-threatens-its-cloud-market-growth/