Things are looking worse and worse for Chinese tech giant Alibaba. After being slapped with a $2.8bn antitrust fine in April, it now has to swallow the bitter pill of losing a major cloud customer. On Wednesday, the company announced that due to the fine it had suffered a net loss of 5.47 billion yuan ($847.5m) in its fourth quarter. Its cloud revenue growth also slowed after losing an important customer, identified by Chinese media as ByteDance.
In Alibaba’s press release, the company did not reveal the name of the customer and only stated that it “operated a large-scale business outside of China and has always used Alibaba Cloud’s overseas services in the past.” Alibaba said that the customer’s decision to terminate the relationship was “non-product-related.”
According to the Chinese news source Caixin, the customer in question is ByteDance – the parent company behind the popular social media app TikTok.
It is not unlikely that ByteDance left Alibaba Cloud due to the US government’s decision to “cleanse local networks of Chinese influence.” Last year, then-US secretary of state Mike Pompeo announced an initiative that would ban the use of Chinese cloud services such as those offered by Alibaba, Baidu and Tencent.
Alibaba Cloud’s revenue for the fiscal year 2021 grew 50% year-on-year (YoY) to 60.1bn yuan ($9.2bn), primarily driven by growth in revenue from internet customers, the public sector and finance industries.
Revenue from the March quarter grew 37% YoY to 16.8bn yuan ($2.6bn). Alibaba explained that the slower growth was primarily attributed to the lost customer. “Excluding this customer, Alibaba Cloud’s top 10 non-affiliated customers together accounted for no more than 8% of Alibaba Cloud’s total revenue in the fiscal year 2021,” it said in a press release.
According to GlobalData’s business analysis, Alibaba Cloud enjoyed strong revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth in the past few years, with the December 2020 quarter representing the first time the business unit achieved positive EBITDA.
Despite its endeavours to establish itself in the international market, Alibaba is still perceived as a China-focused cloud provider, with many of its products only available in the China or Hong Kong region. In recent years, the company has started to expand mainly in the Asia-Pacific region.