Tencent slashes cloud service prices by up to 40% as price war intensifies

Chinese internet giant Tencent Holdings (0700.HK) is cutting prices for cloud services by up to 40% from June amid similar moves from rivals that have plunged the sector into a price war.

The fierce competition comes amid soft corporate demand, with the Chinese economy in the midst of a wobbly recovery since abandoning strict COVID-19 restrictions last year.

Alibaba Group Holding Ltd (9988.HK) said last month it will slash prices for some cloud products by up to 50%. State-owned China Mobile (0941.HK) also joined Tencent on Tuesday in announcing cuts, saying prices for some services would be reduced by up to 60% for a limited time.

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.

This report’s information was first seen on REUTERS; to read more, click  this link.