By Pei Li
HONG KONG (Reuters) - China's Alibaba Group Holding Ltd (N:BABA) is seizing on a new business opportunity thrown up by the novel coronavirus: helping foreign universities skirt China's stringent internet controls to keep classes going for their mainland Chinese students.
Many Chinese students returned home after the virus prompted campuses to shut and have difficulty watching live-streamed tutorials or accessing class materials due to the so-called Great Firewall. That not only blocks websites the government deems sensitive - such as Alphabet Inc's (O:GOOGL) Google - but can also slow loading speeds of accessible overseas-based sites.
University associations told Reuters that, soon after the virus started spreading globally, Alibaba's cloud division met with member institutions and pitched access to a network that could be established within 48 hours and act as a bridge between universities' portals and mainland Chinese students.
The network is a unique proposition by Alibaba Cloud, the biggest cloud service provider in China by market share. The unit, whose revenue is paltry relative to Alibaba's staple e-commerce business, has been aggressively promoting its services and plans to spend $28 billion over three years on next-generation data centres.
This "is a good initiative to gain more spending among these organisations that will increasingly offer a blend of online and offline course content," said analyst Matthew Ball (NYSE:BLL) at Canalys.
Chinese students abroad totalled around 662,100 in 2018, showed latest data from research firm Statista, indicating the market potential.
Alibaba is courting foreign institutions at a time of deteriorating diplomatic relations between China and the West over a slew of issues including trade, virus prevention and Hong Kong security, plus a U.S. campaign to bar Huawei Technologies Co Ltd [HWT.UL] from next-generation telecommunications networks on security grounds.
"During the challenging time of the coronavirus, cloud-based technologies play an important role to help people adopt to the new normal. Our technology offers a solution to meet an important need for students to continue with their studies," Alibaba Cloud said. "This should not be mixed with any political affairs."
COST IS "QUITE HIGH"
Skirting the Great Firewall through connection services such as virtual private networks (VPNs) is illegal in China without a licence, and only a handful of VPN providers are permitted to operate. Alibaba Cloud offers universities the VPN option through its Cloud Enterprise Network of which U.S.-based Fortinet (NASDAQ:FTNT) is a software supplier.
The universities "purchase, deploy and operate Fortinet software products listed on Alibaba Cloud marketplace. The VPN services are operated and managed by the universities themselves," Fortinet said in a statement.
The service allows students to access content from foreign universities stored in or streamed through the cloud without latency. It also offers a VPN-like experience when students browse the web for content relevant only to their studies.
"Schools can manage the services themselves, so that students' online activities are protected against malicious attacks or harmful websites," Alibaba Cloud said in a statement.
The Council of Australasian University Directors of Information Technology (CAUDIT) said 30 of its 47 affiliated universities use Alibaba Cloud. The Joint Information Systems Committee, which provides digital services for universities in Britain, listed four institutions trialling the service.
Chinese cloud rival Tencent Cloud said it has a similar offering and has been trying to court foreign universities, but declined to name clients.
"The cost per month is quite high, but you've got to weigh that up against the impact on students ... and the level of importance that we give to our international students," said Steve Johnston, strategic procurement director at CAUDIT.