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Google Cloud could lose its third-place spot in the cloud wars to Chinese giant Alibaba, a new report says
A new Forrester report predicts that in 2020, Alibaba will surpass Google Cloud in revenue and...A new Forrester report predicts that in 2020, Alibaba will surpass Google Cloud in revenue and become the third place cloud globally, behind Amazon Web Services and Microsoft. This is because Alibaba has a growing presence in China, which has an increased demand for cloud computing services. Still, Google Cloud has a shot at getting its third place spot back if it continues to build out its enterprise salesforce and support team and expand business in Europe, the report says. Click here for more BI Prime stories. Google Cloud will need to watch its back because next year, Alibaba will likely steal its third place spot in the cloud wars against Amazon and Microsoft, according to a new Forrester report. The report predicts that next year, Alibaba will generate $4.5 billion in revenue from its cloud and overtake Google Cloud — currently the third-place entrant in a race that is currently led by Amazon Web Services, with Microsoft in second place. Alibaba, sometimes called the "Amazon of China," is a massive online retailer that posted revenues of the equivalent of over $56 billion in its most recent fiscal year. And, like Amazon, Alibaba expanded in 2009 into cloud computing with the formation of its Alibaba Cloud unit. In July, Google reported an $8 billion annual revenue run rate for its cloud business, which includes its cloud infrastructure services as well as the G Suite productivity suite. However, Google does not break out specific revenue figures for either business. All of that said, Forrester estimates that the revenue from Alibaba's cloud infrastructure business will soon surpass that of Google's. "When we say that Alibaba is threatening Google for the third post, we believe in 2020 Alibaba will make more money than Google will," Dave Bartoletti, vice president and principal analyst at Forrester, told Business Insider. That's because Alibaba has strong uptake in China, where it's headquartered, Bartoletti says. Alibaba isn't necessarily known as an innovator in the space, Bartoletti says, but it's adept at duplicating services available on other clouds. "They are the leading public cloud provider in China, which is a very big market," Bartoletti said. "They have a lot of people using their services there. They are doing well financially. They have money to invest in build out. They are doing a good job of being a fast follower." Still, Bartoletti says, Google Cloud won't have to worry too much about competition from Alibaba when it comes to domestic customers. Alibaba has a smaller presence in North America, so Google Cloud will likely keep its third-place spot in that region, he said. A Google Cloud spokesperson declined to comment further on the report, beyond pointing out its revenue run rate. Business Insider has reached out to Alibaba for comment. 'Alibaba is going to be a little faster right now' While Alibaba continues its strong growth in China, Google Cloud is in a transition phase as it establishes its strategy to snag enterprise customers, Bartoletti says. Microsoft has decades-long relationships with these types of customers, while AWS has been in the cloud market long enough to make big progress on building those bridges, too. "Google was later to the public cloud market for AWS and Azure," Bartoletti said. "They're moving quickly but Alibaba is going to be a little faster right now." However, Bartoletti notes that CEO Thomas Kurian, who joined Google Cloud after years at Oracle, has invested in building out an enterprise salesforce. Previously, Business Insider reported that Google Cloud created a new program to assign highly-paid senior salespeople to go after large customers and changed how it compensated its salespeople to a model more similar to that of Oracle. "[Google Cloud has] made incredible strides in the last couple of years, but they still have a lot of headwinds in supporting enterprises," Bartoletti said. "It's not in their core DNA." A 'decent position to be in' Bartoletti says that if Alibaba does surpass Google Cloud, it will only be by a little bit, leaving the door open for a Google comeback. If nothing else, the search giant has strong name recognition in North America, where Alibaba's brand is weaker. Furthermore, Bartoletti says none of these four cloud giants have established their dominance Europe yet, which is another chance for a Google Cloud to get ahead. "There are no hyperscale public cloud providers based in Europe," Bartoletti said. "Europeans are very sensitive to data protection and data residency. They're kind of wary of American and Chinese companies having access to their data." To regain its place, Google Cloud needs to get used to doing business in the way to which large enterprises are accustomed, such as by investing in its partners the way Microsoft and AWS do, as well as building out its salesforce and improving its support processes, Bartoletti says. He also says Google needs to continue building out the services it specializes in, such as products for Kubernetes, a widely popular open source cloud project that was started in-house at the company – but that has gone on to become something of a standard in the industry. Another opportunity, he said, would be for Google Cloud to redouble its appeal in so-called multicloud, an industry trend where customers use multiple clouds from multiple providers, either for the sake of redundancy, or for otherwise taking advantage of certain platform-specific features and pricing plans. "Another way that Google could ramp up revenue again is to be really be seen as a viable alternative to AWS and Azure," Bartoletti said. "For companies that for whatever reason believe they need to be in more than one cloud, Google as a second cloud to add to AWS and Azure is a decent position to be in."SEE ALSO: Google Cloud's study of 31,000 tech pros shows how working smarter and addressing burnout makes for better cybersecurity and higher productivity Join the conversation about this story » NOW WATCH: Most maps of Louisiana aren't entirely right. Here's what the state really looks like.