Chinese startups depend on US cloud services

The saturated domestic market, along with the risk of compliance with strict regulations, has created a wave of “swimming into the ocean” (chuhai) start-ups. Besides, the rapid rise of TikTok also become an inspiration for young startups.

Currently, this short video sharing platform is already the 3rd largest social network in the world, behind Facebook and Instagram. Market research firm eMarketer predicts TikTok could reach 1 billion users by 2025.

However, TikTok also poses a problem that needs to be solved with Chinese technology businesses when going to the global market. That is, the West does not trust any company with connections to the mainland, whether the founder is a national or a group of engineers in the country.

Therefore, the first and most important step in the efforts of startups to go further is to establish trust with customers. Storing data in the target market or a neutral country would be the most likely solution. And this solution requires cloud technology.

It’s no surprise that AWS, Microsoft Azure, and Google Cloud have become the top choices for Mainland “chuhai” companies. China also has cloud giants like Alibaba and Tencent, but choosing a supplier here is probably the last thing companies want to do to assuage data security concerns from the other side. bridge.

In the short term, the “chuhai” start-up wave has yet to make a big splash in the Western cloud market, as most businesses are still in the first chapter of their world exploration. Even TikTok’s deal with Oracle did not significantly change the US cloud service provider’s market share. But the trend toward US companies is sure to hurt domestic cloud providers in the long run.

For example, Alibaba’s first-half report showed that its cloud segment was significantly impacted by the loss of a key customer, resulting in a “decline in revenue” as the leading Internet company moved to use cloud services abroad. Although not named, but the VIP customer is speculated to be TikTok, the company stopped using the Alibaba Cloud service when geopolitical tensions between Washington and Beijing increased.

The Vinh (According to TechCrunch)