UPDATED 11:59 EDT / JULY 29 2015

Jack Ma, co-founder and chairman of Alibaba Group Holding Limited NEWS

Alibaba invests a billion dollars to dethrone Amazon in the public cloud

Chinese e-commerce titan Alibaba Group Holding Ltd. is opening a new competitive front against arch-nemesis Amazon Inc. with a billion dollar investment in its cloud business that will help fuel expansion to three additional continents. It’s an ambitious move taken straight out of the IBM Corp. playbook, or perhaps more appropriately, checkbook.

The enterprise technology stalwart has found a great deal of success with its ten-figure strategy, most notably in helping to catapult Linux to top of the server food chain, and more recently made a similar capital infusion into its own fight against Amazon’s dominant public cloud. As a result, IBM’s infrastructure-as-a-service unit is now among its fastest growing businesses.

Alibaba perceives itself as being in a position to replicate that success. Aliyun, its cloud arm, boasts 1.4 million customers compared to Amazon’s million that contributed to a massive 81 percent year-over-year sales increase in the last quarter, a mere one point shy of its rival’s growth during the same period.

But there are also a number of factors working to Alibaba’s disadvantage. For starters, that 81 percent jump is from a revenue base a fraction the size of Amazon’s, much of which is accounted for by customers in China, mainly small- and medium-sized businesses with fairly basic hosting needs. As a result, Aliuyn has little to no brand recognition with international enterprise buyers, which is what the new billion-dollar investment is meant to change.

The move will see the company open data centers in Middle East, Japan and Europe and as well as the U.S. East Coast to join its existing Silicon Valley facility. It’s a step in the direction, but many more will be required to catch up with Amazon. And in particular, a lot more investment.

After all, Amazon has poured many billions of dollars into its cloud platform every year for the last ten since its launch, while Aliyun has only been in operation for a total of six. It’s an uphill battle even steeper than the one IBM, with its established brand name, is facing, but a dominant presence in the world’s most populous country where 1.4 million cloud customers constitute only a fifth of the addressable infrastructure-as-as-a-service market is nothing to be sniffed at.

Pictured: Alibaba founder Jack Ma

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