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.
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