Flashmag Digizine Edition Issue 96 August 2019 - Page 98

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service and buy its financial products.

Martin Bao, an analyst at ICBC International in Hong Kong, said Alibaba is betting on leveraging the ownership of an entire ecosystem: a trader selling on Alibaba's e-commerce platform should also use its cloud service and buy its financial products.

A more embarrassing possibility, however, is that the aggressive diversification that has resulted in a decline in the company's profitability may not be able to generate a return as high as expected.

"Nobody had tested such a business model yet, it's a challenge," said Bao.

Tencent has similar ambitions. In October 2018, the company announced a "strategic organizational upgrade" intended to better serve not only consumers, but also the retail, hospitality and finance sectors, as the company moves forward, and embarks on what it calls "the era of the industrial Internet". Pony Ma Huateng, chairman and CEO of the group, said his goal was to enable "different sectors to better connect with consumers via an expanding, open and connected ecosystem."

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According to Tencent, most of the revenue from this new segment comes from payment services, including WeChat's digital portfolio.

Alibaba dominates both mobile payment and cloud infrastructure services in China, while Tencent is in second place, according to estimates.

Alibaba, which made its debut in cloud computing 10 years ago, said on May 15, 2019 that revenues from its cloud services jumped 76 percent, mainly due to an increase in average spend per customer.

Alibaba has become an indisputable leader in this booming market. According to Gartner Research, Alibaba's cloud computing business in Asia-Pacific last year surpassed Amazon's and Microsoft's combined market share in service infrastructure and utility infrastructure. two most popular forms of cloud services.

Investments in the cloud are symbolic of the path that both companies plan to follow.

Martin Bao, an analyst at ICBC International in Hong Kong, said Alibaba is betting on leveraging the ownership of an entire ecosystem: a trader selling on Alibaba's e-commerce platform should also use its cloud

Jack Ma Ali Baba CEO