Internet giant Tencent Holdings is slashing prices for cloud services by up to 40 percent from June amid similar moves from rivals such as Alibaba and China Mobile.
Alibaba Group said last month it will slash prices for some cloud products by up to 50 percent.
State-owned China Mobile also joined Tencent in announcing cuts, saying prices for some services would be reduced by up to 60 percent for a limited time.
Alibaba Cloud (36 percent share), Huawei Cloud (19 percent), Tencent Cloud (16 percent) and Baidu Cloud (9 percent) are the top Cloud service providers in China during the third quarter of 2022, says Canalys report.
Charlie Chai, an analyst at 86Research, said Chinese cloud service providers had in the past made efforts to avert a price war but at the end of the day they still went down this path. He noted the companies had expanded aggressively and now had too much capacity.
Wei Yunfeng, a researcher at data firm IDC, said the price war was also being driven in part by high sales targets despite slowing growth for the market.
Alibaba’s cloud revenue accounts for about 9 percent of its total revenue. Tencent does not break out separate figures for cloud revenue.
Tencent, the world’s largest video game company and operator of the WeChat messaging platform, posted an 11 percent rise in revenue that reached 149.98 billion yuan ($21.70 billion) for the three months ended March 31.
Two of Tencent’s most popular games — Honour of Kings and CrossFire — earned record revenue thanks to new added features and promotions, while newly launched games also recorded solid sales and user growth.
Domestic gaming revenue gained 6 percent to 35.1 billion yuan while international gaming revenue rose 25 percent to 13.2 billion yuan.
Tencent’s revenue from online ads rose 17 percent to 21 billion yuan. Tencent said revenue from fintech and business services grew 14 percent to 48.7 billion yuan.
Tencent’s net profit rose 11 percent to 25.83 billion yuan during the first quarter of 2023.
Cloud infrastructure services expenditure in mainland China grew 8 percent in Q3 2022, reaching US$7.8 billion and accounting for 12 percent of overall global cloud spend, Canalys said earlier.