Tencent announces $70bn tech infrastructure spending spree

Tencent follows rival Alibaba in announcing mammoth tech infrastructure investment

Chinese technology group Tencent Holdings has announced plans to invest $70bn upping its capabilities in cloud computing, AI, blockchain, IoT and quantum computing over the next five years.

As part of the investment, announced on WeChat this week, Tencent said it will spend billions building hyperscale data centres, supercomputers and sprawling 5G networks.

The announcement is thought to be a response to Chinese e-commerce leader Alibaba Group’s three year $28bn investment into cloud computing infrastructure, announced in April.

Alibaba’s cloud division dominates China’s cloud market with a 46.4 percent percent share, while Tencent’s cloud unit trails in second place with an 18 percent share, according to Canalys.

Tencent appears to be following the same strategy as its rival, which is to buy infrastructure in bulk in order to keep cloud fees competitive.

According to the latest market figures, Tencent is the seventh most valuable company in the world, where it narrowly trails social media giant Facebook.

Tencent was also the first Asian company to pass the $500 billion valuation mark.

Like Facebook, Tencent came to prominence through a social media platform, called WeChat. WeChat has over a billion users who not only use the app to chat but to transfer money, pay bills and pay in stores.

The company is now involved in just about every area of technology. It is the world’s largest video game company, one of the world’s largest venture capital firms and is involved in e-commerce, smartphones and music entertainment.