HONG KONG - Alibaba Group Holding is rolling out its second major price cut for cloud services in years, aiming to win back users from rivals like Tencent Holdings competing to provide the tools critical to training artificial intelligence.

Alibaba will slash prices starting on Feb 29 on scores of Internet-based services by as much as 55 per cent, and by 20 per cent on average. The discounts span more than 100 products, including data storage and elastic computing options for online processing power to clients, Alibaba executives told reporters in Beijing.

Alibaba’s shares slid 2.3 per cent in Hong Kong after the news, the most since Feb 9.

The cuts mark one of the more aggressive moves by Alibaba to stay ahead of Tencent and Baidu in the cloud business.

They come after Alibaba called off a spin-off and initial public offering for the formerly fast-growing unit, a move that surprised investors hoping to buy into a key business that’s essential to AI development.

It is now focusing on growing the public cloud – the domestic services arm aimed at enterprise customers – given US sanctions curtailing the supply of advanced chips to Chinese companies. Chief executive Eddie Wu has taken direct control of the unit and revamped major lines.

“That’s why we decided to launch the price reduction campaign – to lower the threshold of cloud services for more enterprises and developers to reap the technological dividends and accelerate the adoption of advanced public cloud services across various industries,” Mr Liu Weiguang, president of the unit’s public cloud segment, said in a statement.

Alibaba has struggled over the past year to revamp its vast e-commerce, logistics and cloud empire in the face of fierce competition and geopolitical risks.

The company is looking to revive growth after two years of regulatory scrutiny and Covid-10-era economic turbulence.

It seeks to hive off non-core assets to raise capital, while dividing its sprawling operations into more clearly defined areas.

But the cloud – the business spawned over a decade ago from the need to support a mammoth e-commerce operation – remains a focal point.

The company announced cuts from 15 per cent to 50 per cent for core products of the Alibaba Cloud in April 2023, in a move aimed at capitalising on the demand for raw computing power needed for AI models such as Alibaba’s own Tongyi Qianwen.

The previous round of discounts triggered fears that rivals like Tencent and Baidu will follow suit, eroding margins for a wide swath of the Chinese Internet industry.

Feb 29’s cuts will apply retroactively to clients that renew their orders on discounted products for at least a year within the next three months, for the remaining undelivered cloud resources they had previously purchased.

The price cuts from China’s largest cloud provider are also aimed at attracting longer-term customers, with special discounts for five-year plans. The free-usage amount for consumer storage will also double to 20GB from 10GB. BLOOMBERG