The battle for cloud in Asia is heating up.

China is poised to become the second-largest cloud service market in 2019, worth $10.5 billion. The country will also become the fastest-growing market, with a projected 44.9% annual growth rate in the next five years.

Amazon is betting it can expand its cloud computing operations in China, despite announcing just last month that it will shutter its online retail operations there.

But while Amazon is upbeat about demand for cloud services in the region, it faces a familiar rival: Alibaba, whose grip on China's e-commerce market meant Amazon was unable to challenge.

In Asia, according to Gartner, AWS is not the big dog and Alibaba Cloud commands 19.6% of the market, compared to 11% for AWS and 8% for Microsoft.

One of the biggest advantages of being the "home team" comes from government regulations that have created barriers to foreign players entering the market.

Also, Alibaba Cloud over the years has created a powerful business ecosystem where it has invested in over 157 companies in China.

AWS, by contrast, will have an edge in winning over foreign companies that operate in China and have already been using AWS's products in offices outside the country.

AWS seems has high hopes for Southeast Asia's cloud services market which is expected to generate $40.32 billion in revenue by 2025, driven by increasing demand for cloud computing among emerging small and midsize business.


But it seems that governments across the region move toward stricter governance on cloud services similar to those in China requiring cloud services operators to store data in local data centers.

Indonesia, for example, ruled that the country's financial data should be housed within Indonesia. AWS announced that it is planning to launch multiple data centers in Jakarta, where Alibaba Cloud already has two.

Fascinating, battle and looking forward to seeing what Microsoft and Google are going to do.