Alibaba in talks with BT for cloud deal

Bloomberg

Alibaba Group Holding Ltd. is in talks with BT Group Plc about a cloud services partnership as the Chinese internet giant challenges Amazon.com Inc.’s dominance in Europe.
An agreement between Alibaba and the IT consulting unit of Britain’s former phone monopoly could be similar to Alibaba’s existing arrangement with Vodafone Group Plc in Germany, according to a person familiar with the matter, who asked not to be identified.
A BT spokeswoman confirmed by email that the UK telecom company is in talks with Alibaba Cloud and declined to give details. A spokesman for Alibaba declined to comment.
Started in 2009, Alibaba Cloud has expanded fast beyond China in a direct challenge to Amazon Web Services, the e-commerce giant’s division that dominates cloud
computing. Alibaba Cloud is now the fourth-biggest global provider of cloud infrastructure and related services, behind Amazon, Microsoft Corp. and Alphabet Inc.’s Google, according to a report last month by Synergy Research Group.
Europe has become key to Alibaba Cloud’s success outside China, with prospects in the US made murky by President Donald Trump’s America First agenda.
Alibaba has pulled back in the US just as tensions between America and China have escalated under Trump.
Alibaba started the German partnership with Vodafone in 2016. The Hangzhou, China-based company put its first
European data centre in Frankfurt, allowing Vodafone to resell Alibaba Cloud services such as data storage and analytics. Last week, Alibaba Cloud moved into France, agreeing to work with transport and communications company Bollore SA in cloud computing, big data and artificial intelligence.

Telecom Dilemma
BT’s talks with Alibaba underscore a dilemma for the telecom industry. As big tech companies and consulting firms muscle in on their
business installing and maintaining IT networks for large corporations, they must choose whether to resist them, or accept their help and decide which to ally with.
BT Global Services has struck up partnerships with Amazon, Microsoft and Cisco Systems Inc., while Spain’s Telefonica SA works with Amazon. In Germany, while Deutsche Telekom AG’s T-Systems has partners including China’s Huawei Technologies Co. and Cisco, it has structured its public cloud offering as an alternative to US giants Amazon and Google — touting its ability to keep data within Germany where there are strict data-protection laws, 100 percent out of reach of US authorities. A deal with Alibaba could bolster BT’s cloud computing and big data skills as clients shift more of their IT capacity offsite to cut costs.
BT is undertaking a digital overhaul of its Global Services business in a restructuring involving thousands of job cuts after revenue at the division fell 9 percent last year. The poor performance of Global Services and the ouster last month of BT CEO Gavin Patterson have fuelled speculation among some analysts that BT may sell the division. Still, the unit is seen by some investors as critical for BT’s relationships with multinational clients.
UK security agencies may scrutinise any partnership between the Chinese company and the chief custodian of Britain’s communications infrastructure. Alibaba’s 2016 Vodafone deal required a
compliance certificate from Germany’s office for information security.