Speaking at the HKU Business School Edward K Y Chen Distinguished Lecture, Alibaba Group Holdings (NYSE: BABA) chairman Joe Tsai said the company built its cloud business out of urgent need—not strategy—as rising reliance on U.S. technology vendors put its future profitability at risk.
Alibaba Turned To Cloud To Avoid Costly Dependence
Last week, Tsai told an audience of nearly 1,000 at The University of Hong Kong that Alibaba's move into cloud computing 16 years ago was driven by a simple but alarming realization.
The company was becoming too dependent on U.S. hardware and software providers. At the same time, its e-commerce operations were expanding at breakneck speed.
"We were … handling massive amounts of transactions," he said during a conversation moderated by HKU Associate Vice President Heiwai Tang.
He continued that at the time, Alibaba warned that relying on third-party systems — including servers from Dell Technologies Inc. (NYSE: DELL) and IBM (NYSE: IBM), and databases from Oracle Corp (NYSE: ORCL) — would eventually eat into Alibaba's profits and hand too much financial power to outside vendors.
"If we continue to use that, we will later on hand over all of our profits to these technology vendors. So we developed cloud computing really out of necessity, out of the need to become self-reliant in technology," Tsai stated.
From Internal Lifeline To Global Business
Tsai said Alibaba first used the technology internally—what he described as eating "our own dog food"—before recognizing its broader commercial value.
"Later on, we decided, why don’t we this technology is so good, why don’t we open it up to third-party customers and that’s how we went into the cloud business," he said.
Alibaba Cloud Extends Its Lead With Strong Revenue And AI Growth
Alibaba Cloud has since grown into one of the largest cloud providers in Asia. Earlier this month, the company reported quarterly revenue of $34.81 billion, a 5% increase from a year ago and ahead of analysts' expectations of $34.43 billion.
Stripping out contributions from the divested Sun Art and Intime units, Alibaba's revenue would have risen 15% year-over-year.
The Cloud Intelligence Group delivered a 34% revenue jump to $5.59 billion, fueled by robust demand for public cloud services and rising adoption of its AI products.
Alibaba Cloud also expanded its presence in the open-source community, surpassing 180,000 Qwen model derivatives on Hugging Face as of Oct. 31, 2025—more than twice the number produced by the next-largest contributor.
According to Omdia's "AI Cloud Market: China – 1H25" report, Alibaba Cloud maintained the top position in China's AI cloud market with a 35.8% share.
AWS And Google Cloud Post Strong Double-Digit Growth In Q3
Meanwhile, Amazon.com, Inc. (NASDAQ: AMZN) reported third-quarter net sales of $180.2 billion, a 13% increase from last year, while AWS generated $33.0 billion in revenue, up 20% year-over-year.
Google parent Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) reported third-quarter revenue of $102.35 billion, topping analyst expectations of $99.64 billion, according to [Benzinga Pro. Google Cloud brought in $15.16 billion, up from $11.35 billion a year earlier.