TikTok's parent ByteDance is expanding into a non-core area that may benefit the company significantly in the long run.

What Happened:  ByteDance's Volcano Engine division is set to roll out its Cloud computing service in the September-October timeframe, the CnTechPost reported, citing local Chinese media. According to the report, the Cloud computing IaaS service will have computing, storage, and networking.

ByteDance, which has a completed data center in Zhangjiakou, Hebei province, is also looking to build large data centers in and around major cities like Shanghai and Shenzen, the report added.

The Chinese company reportedly seeks to pitch its Cloud service against similar offerings from Alibaba Group Holding Limited (BABA), Tencent Holdings Limited (TCEHY), and Huawei.

However, ByteDance is not looking at launching a public cloud service at this point but will move its core services, such as TikTok, to its in-house IaaS platform in the second half of the year. It could eventually make a dent in other cloud service providers, including Alibaba.

Why It's Important:  ByteDance's foray into Cloud computing could eventually hit Alibaba. TikTok has already ceased using Alibaba Cloud services outside of China.

The termination of the TikTok deal outside of China would cost Alibaba $800 million in revenues per year.