Chinese tech firms up spending on cloud centers

China's top Internet firms, including Tencent and Baidu, are increasing spending on cloud centers but they face strict regulations over security and privacy protection, industry officials said.

China's cloud infrastructure market grew 54 percent year on year to US$6.6 billion in the second quarter, making it the fastest-growing region among major economies globally, said researcher Canalys.

The top 4 spenders are Alibaba, Huawei, Tencent and Baidu, accounting for 80 percent of total cloud spending in the quarter.

The four leading cloud service providers will continue growing strongly in 2021 as local demand remains high with digital transformation, artificial intelligence and smart upgrades in corporate and government agendas, according to Canalys.

But they also face strict regulation pressures such as antitrust and Internet-related policies as well as security and privacy protection laws, analysts said.

In August, China passed its first Personal Information Protection Law to prevent businesses collecting sensitive personal data and to crack down on crimes like online fraud and data theft.

The law, which will take effect in November, similar to Europe's General Data Protection Regulation (GDPR), requires companies to justify their data collection and provide consumers with the right to access or delete their information.

To meet the new demands and regulation requirements, Baidu has launched new "privacy (protection) computing" systems, covering sensitive data protection and regulation-required tracking features. They make data "used" but not "movable, seen or tracked" to meet regulation requirements and help clients, said Han Zuli, a senior security expert of Baidu.

Currently, the system is used in governance, finance, medical, e-commerce, health care, education and media sectors, said Baidu.

As the world's No. 5 and China's No. 2 cloud brand, Huawei Cloud has more than 2.3 million developers and more than 4,500 services available. It fuels the transformation for clients from Internet companies, traditional enterprises and governments to take their organizations digital, Huawei said last month.

Baidu continued to focus on simplifying AI technology for broader enterprise adoption, while Huawei is in a strong position to drive growth, particularly in the public sector, said Canalys.