American datacenter and internet-exchange provider Equinix established a partnership in June with Chinese e-commerce giant Alibaba Group that will allow a greater number of multinational corporations from both countries to connect with customers across the Pacific. The partnership is part of Alibaba’s Marketplace Alliance Program, which is aimed at expanding the international presence of Aliyun, the corporation’s cloud-computing wing. Aliyun opened its first datacenter in the US in March of 2015 at an undisclosed Silicon Valley location, but as part of the new deal with Equinix, Alibaba will be able to extend its cloud service using Equinix Cloud Exchange (ECX) centers based in Hong Kong and Silicon Valley.
Despite its infamous rivalry with American competitor Amazon, Alibaba is not inexperienced when it comes to working with US companies. Before recording the largest initial public offering in US history in September 2014, Alibaba began gobbling up shares in several American tech start-ups. The company has also brought US retailers and Chinese and American consumers together through its e-commerce sites Tmall and 11 Main. In a deal reached in November 2014, Alibaba provided Costco with a safer entrance into the often tricky Chinese market by allowing the American warehouse club to sell its products on Tmall, which in 2014 accounted for 57% of business-to-customer e-commerce in China.
Alibaba and its cloud service enjoy healthy market shares within China, thus providing American companies an impetus for pursuing these partnerships. Alibaba currently holds an astounding 44% revenue share within the Chinese business-to-business e-commerce market, while Aliyun possesses a respectable 23% of the country’s cloud-computing market.
Equinix was a smart choice for Alibaba to partner with, as the California-based corporation operates 21 ECX facilities on five continents. Equinix has helped companies like Microsoft and Amazon to expand their cloud-computing platforms abroad and plans to eventually grant Alibaba access to other Equinix facilities around the world.
Patrick Madaj is a Research Intern at the East-West Center in Washington and an undergraduate student at the University of Oklahoma.