A cyclist rides past a signboard of Alibaba Group in Hangzhou city, East China's Zhejiang province, June 25, 2014. [Photo/IC]

Alibaba Group Holding Ltd opened its second data center in Silicon Valley in the United States as it invests $1 billion in its cloud computing business globally to compete with Amazon.com Inc for clients.

The facility will target customers on the US West Coast in the next three to five years, said Ethan Yu, who is leading the AliCloud unit's international expansion. Alibaba is planning its first data center in Europe in the first half of 2016.

Alibaba is betting on Internet-based computing and big data to boost growth in the next decade, tapping into demand for processing and storage from governments, finance and online gaming companies. AliCloud could account for more than $1 billion of Alibaba's revenue by 2018 and public cloud presents a $120 billion global market opportunity, according to research by SunTrust Robinson Humphrey Inc.

"In our expansion we run into Amazon Web Services frequently as we both are addressing a fast-growing market," Yu said. "As a competitor there are a lot of things we could learn from them, but there's also a lot of ways we can differentiate ourselves."