Chinese food delivery and services platform Meituan Dianping is shutting down its public cloud service in order to retain focus on its core businesses.

Why it matters: Halting its cloud computing services is a major pullback in Meituan’s expansion into enterprise tech, a trend which has formed the basis of many recent moves by competitors including Alibaba and Tencent. 

  • The draw-down comes as Meituan braces for accelerated competition in its core business. Earlier this month, Alibaba-backed payment tool Alipay beefed up its push onto Meituan’s turf in local life services with plans to support millions of other service providers.
  • The news follows just three months after the company drastically increased  registered capital for its cloud computing subsidiary in December to RMB 870 million (around $123 million) from RMB 10 million, which prompted local media reports that the local lifestyle giant was ramping up its enterprise tech push.
  • The company has been criticized in the past for over-expansion into a number of business fronts such as ride-hailing, bike rentals from its Mobike acquisition, new retail, and others. After its share prices plunged in 2018, Meituan tightened up its operations and posted profits for two consecutive quarters in the second and third quarters of 2019.

Details: Meituan Open Services (MOS), the company’s public cloud platform, announced on March 12 that it will halt its services and user support starting May 31. 

  • The company warned that all the data hosted by the platform will be purged and not recoverable after that date. MOS recommended that users either back up data themselves or transfer it to other platforms.
  • MOS will continue to operate the service for internal use and for business partners such as merchants on its service platform, but will cease running the unit as a for-profit business, according to a person with knowledge of the matter.
  • Users can apply for a refund by providing an order number, according to the statement.
  • A Meituan spokeswoman did not disclose the number of users that would be affected by the shutdown when contacted by TechNode on Monday.

Context: First launched in 2013 a unit for internal support, MOS opened up to startup and enterprise customers in 2015 to deliver cloud and big data solutions.

  • It has been supporting Meituan’s daily business operations, serving users across industries including food and dining, travel, O2O, mobility, and others. 
  • China’s public cloud services market hit $5.42 billion in the first half of 2019, driven by non-internet sectors which are increasingly adopting cloud services as part of a mass push toward digital transformation, according to a report from IDC. 
  • The report points out that the market is highly consolidated among the industry’s top 10 vendors, including Alibaba, Tencent, and Huawei which now claim more than 90% of the market, leaving little room for small players. MOS was not among the top 10.

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com. More by Emma Lee