Alibaba Cloud has announced the imminent closure of its data centre operations in Australia and India – a move that contradicts its previous assurances to The Register about the stability of its Australian presence.
The Chinese cloud giant recently disclosed this decision, framing it as part of a broader infrastructure strategy update. In a statement, Alibaba Cloud explained, “As part of Alibaba Cloud’s infrastructure strategy update, following careful assessment, we have decided to cease operations at our data centres in Australia and India while enhancing our investment in Southeast Asia and Mexico.”
The company asserts that it has been proactive in communicating with affected customers, stating, “Alibaba Cloud has issued multiple rounds of notifications and technical migration plans to affected customers since December 2023.” This timeline is particularly noteworthy given the recent events.
In February 2024, The Register received a tip suggesting that Alibaba Cloud was planning to close its Australian operations and had already begun layoffs. When approached for comment, Alibaba representatives responded that their Australian office remained open and no job cuts had been made. In retrospect, this response seems to have been, at best, evasive, as the decision to shut down had already been made by that time.
The closure timelines have now been made public: Australian customers have been informed that data centre operations will cease on September 30, while Indian customers face a shorter deadline of July 15. After these dates, data stored in the Australia (Sydney) and India (Mumbai) regions will no longer be accessible. Alibaba Cloud is recommending that affected customers migrate their data to other Alibaba Cloud data centres.
The decision to exit the Australian market, while surprising, can be partially explained by the country’s unique circumstances. Australia is a wealthy but relatively small nation with a population of 27 million, where major players like AWS, Azure, Google, and OVH already have strong footholds. Additionally, public sentiment in Australia towards Chinese companies has been somewhat negative in recent years, potentially making it a challenging market for Alibaba Cloud.
The withdrawal from India, however, appears more puzzling at first glance. India is the world’s most populous nation and, according to the International Monetary Fund, is experiencing robust GDP growth of 6.8 percent, ranking eighth globally. Most tech companies view India as a market with enormous potential. However, the current frosty relations between Beijing and Delhi likely play a significant role in this decision. The Register speculates that few Indian buyers would seriously consider a Chinese cloud provider in the current political climate.
Alibaba Cloud’s pivot towards Mexico may be a more strategic move. The company recently announced plans to open its first data centres in Mexico, which appears to be linked to the growing presence of Chinese manufacturers in the country. These companies, which may already use Alibaba Cloud in China (where it leads the public cloud market), could be more inclined to utilise its services as it expands into North America.
The choice might also have been swayed by the data centre design specifications of the company. Alibaba Cloud is known for its large-scale operations—according to a report, each of its data centre sites can support 1,875 servers, each linked to eight GPUs and consuming up to 18MW. The Register suggests that Alibaba Cloud’s operations in Australia were not as extensive and likely involved the use of a colocation facility.
China’s leading cloud provider has decided to discontinue certain services and solutions. This decision stems from the fact that its main division cannot operate non-standard configurations in global data centres without incurring significant costs. In particular, the business case for operations in Australia and India is not supported as their low throughput does not make them viable.
This strategic pivot looks like Alibaba Cloud is concentrating on where it can support its preferred infrastructure scale and leverage existing business relationships—all of which could help in the potential rationalisation of its global operations.
(Photo by Sammyayot254)
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