Amazon is selling parts of its cloud computing business in China to its local partner to comply with tough new data laws for foreign tech firms in the world’s second largest economy.
In a statement, Amazon said it is not exiting the Chinese market dominated by rival Alibaba but that it “sold certain physical infrastructure assets” to conform with Chinese law.
Beijing Sinnet Technology, Amazon’s partner in China, said in a filing this week that it would buy Amazon Web Services hardware for up to $301 million, according to CNBC. Sinnet said the deal will help Amazon “comply with local laws and regulations and further improve service quality and security.”
Amazon’s full statement, which goes to lengths to reinforce that it is maintaining AWS intellectual property rights in China.
“No, AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS’s industry leading cloud services. Chinese law forbids non-Chinese companies from owning or operating certain technology for the provisions of cloud services. As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet, its longtime Chinese partner and AWS seller-of-records for its AWS China (Beijing) Region. AWS continues to own the intellectual property for AWS Services worldwide. We’re excited about the significant business we have in China and its growth potential over the next number of years.”
The move marks the latest sign of stringent Chinese regulations impacting foreign technology companies. Chinese regulators have tightened rules on foreign data and cloud services and new cyber security laws give China’s government more control over the operations of network providers.
At the same time, China’s cloud market is also quickly becoming a goldmine for technology firms.
Amazon has tried to break into the market since 2014, when it launched cloud services in China and signed a deal with Sinnet. While still the global leader in public cloud market share, Amazon trails Alibaba for control of the Chinese cloud sector.