Updated with Alibaba statement:

Alibaba Group Holding Ltd.’s cloud business may be experiencing strong overall growth, but the company has apparently struggled to make inroads into the ever-important U.S. market.

That’s according to a new report in The Information today that claimed the Chinese e-commerce giant is putting the brakes on its stateside infrastructure expansion plans. However, Alibaba issued a statement late Friday denying a change in its strategy.

“Alibaba Cloud’s U.S. strategy has always been primarily focused on working with U.S. companies who need cloud services in China and Asia and helping Chinese companies with cloud services in the US, not competing head to head with local players,” a spokesman said. “Our commitment to this market remains unchanged. On a global level,  Alibaba Cloud is already the #3 cloud provider, and we aim to be the industry leader in both scale and technology. While still relatively early days for our cloud business, we are growing aggressively and have significant runway in China and in many markets around the world.”

According to the anonymous sources cited in the story, Alibaba has run up against two major major challenges since entering the U.S. cloud market in 2015.

The first is competition from incumbent players. The industry’s three leading providers — Amazon Web Services Inc., Microsoft Corp. and Google LLC — all had a significant head start over Alibaba not just in the U.S. but the cloud market as a whole. Moreover, they’re actively working to gain market share in Alibaba’s home turf of China via local data centers.

The e-commerce giant’s cloud unit has reportedly already “stopped competing aggressively against its big U.S. rivals.” So far, Alibaba’s customer acquisition strategy is said to have involved offering companies large discounts to switch from other platforms.

The report cited a concern over potential regulatory backlash as the other factor behind the company’s change of heart. Chinese tech firms are facing increased scrutiny from lawmakers against the backdrop of the ongoing trade dispute between Washington and Beijing.

With all that said, Alibaba apparently doesn’t intend to retreat from the U.S. market altogether. According to The Information’s tipsters, the company plans to refocus on courting large multinational enterprises that need cloud infrastructure in China to support their local operations.

The move probably won’t make a big dent in the revenues of Alibaba’s cloud unit. The business sales jump an impressive 91 percent year-over-year to 4.7 billion yuan, or $683 million, during the first quarter thanks almost entirely to demand from customers in Asia. According to Gartner Inc.’s most recent report on the cloud infrastructure-as-a-service market, Alibaba Cloud claims the third-largest market share at 4.6 percent, ahead of Google’s 3.3 percent.

Just two weeks ago, in a sign of aggressive expansion in the rest of Asia, Alibaba’s cloud operation launched a mass of new products and a new partner program. The company has also spent years building out its data center infrastructure across Europe and the Middle East, Australia, ASEAN and Japan in hopes of displacing rivals such as AWS.

Still, the fact that Alibaba apparently failed to win as much market share from U.S. rivals as it had hoped may cast a shadow over its long-term growth prospects. AWS and Microsoft already have an active cloud presence in China, while Google reportedly intends to follow suit. The three tech giants also operate in many of the other Asian markets where Alibaba’s cloud unit competes.

One Alibaba executive, Jian Wang, chairman of the Alibaba Group Technology Steering Committee, explained the company’s cloud strategy to SiliconANGLE’s livestreaming studio theCUBE late last year:

Image: Alibaba