China's dominant role in the global and regional cloud industry
China is by far the largest public cloud market in APAC and is home to two of the world's leading infrastructure as a service (IaaS) providers worldwide, Alibaba Cloud and Huawei. IaaS is one of the three major market segments of cloud services, with the other two being platform as a service (PaaS) and software as a service (SaaS). IaaS was forecast to generate close to 66 billion U.S. dollars in revenue by 2026, making it the largest cloud segment in APAC.The global market is dominated by U.S. providers such as Microsoft Azure, Amazon Web Services (AWS), and Google Cloud Platform (GCP). AWS is the leading vendor across the Asia-Pacific region, excluding China, where local provider Alibaba Cloud holds over 30 percent of the IaaS market share.
Southeast Asia as the main hotspot for U.S.-China cloud competition
Committing to a foreign service provider also bears political and diplomatic implications. As cloud technology becomes increasingly indispensable for companies and governments, a country's dominance in foreign cloud markets may enable it to partake in local decision-making processes and shape a market's digital infrastructure.Southeast Asia is currently the fastest-growing cloud market globally and, therefore, highly contested by U.S. and Chinese cloud companies. U.S. providers AWS, Microsoft Azure, and GCP are leading the Southeast Asian market, and Alibaba Cloud is ranked fourth and is heavily investing in the region. Also known as Aliyun, the Chinese provider generates an annual revenue of around 11.8 billion dollars.
In efforts to remain competitive in Southeast Asia's cloud market, these international providers are opening data centers in the region and have launched billion-dollar initiatives to upskill local developers and small to medium-sized companies.
