Alibaba eyes cloud computing expansion with $1 billion investment

Alibaba announced the move on Wednesday, months after it opened its first data center in the U.S., in an effort to target customers there.

The Chinese company clearly has more in store. Part of the $1 billion investment will go toward the international expansion. The rest will go to developing new products, and building up partnerships with other companies in the industry.

Although Alibaba is well known for its e-commerce activities in China, the company has also emerged as the leader in the country's cloud computing market, according to analysts. It has attracted major clients including Chinese government agencies, as well as local gaming and financial firms.

The company now wants to tap the global market. It has plans to build more data centers in Europe, Japan, Southeast Asia and the Middle East. Earlier this month, Alibaba said it plans to build another data center in the U.S., although it declined to offer details.

The cloud computing business could certainly help Alibaba drive additional growth, but it will also face fierce competition, especially in the U.S., where Amazon, Google and Microsoft already have a major presence. To attract customers, Alibaba in July announced a "data protection pact," vowing to keep its users' data secure.

Alibaba's pact is more of a marketing move, according to Charlie Dai, an analyst with Forrester Research. Customers value security, and Alibaba wants to prove that its technology can provide it, he said.