Alibaba’s US cloud business is small, with estimated annual revenue of less than $50 million
Washington:
The Biden administration is reviewing e-commerce giant Alibaba’s cloud business to determine whether it poses a threat to U.S. national security, according to three people with knowledge of the matter, as the government continues to work with U.S. firms. It also investigates the behavior of Chinese technology companies.
The focus of the investigation is on how the company stores data on US customers, including personal information and intellectual property, and whether the Chinese government can gain access to it, the people said. One of the people said the ability for Beijing to obstruct US users’ access to their information stored on Alibaba Cloud is also a concern.
US regulators may ultimately choose to force the company to take measures to mitigate the risks posed by the cloud business, or prevent Americans from using the service altogether at home and abroad. Former President Donald Trump’s Commerce Department was concerned about Alibaba’s cloud business, but according to one of three people and a former Trump administration official, the Biden administration began a formal review after taking office in January.
Alibaba’s US cloud business is small, with an estimated annual revenue of less than $50 million, according to research firm Gartner Inc. The most promising business and a blow to the reputation of the company as a whole.
A Commerce Department spokesperson said the agency does not comment on “the existence or non-existence of transaction reviews.” The Chinese embassy in Washington did not respond to a request for comment.
Alibaba declined to comment. It flagged similar concerns about operations in the US in its most recent annual report, saying that US companies that have contracts with Alibaba “may be restricted from continuing to do business with us, including Our … includes fulfilling our obligations under the Agreements relating to Cloud Services.”
Alibaba’s cloud business is being investigated by a small office within the Department of Commerce known as Intelligence and Security. It is an attempt by the Trump administration to use sweeping new powers to restrict or restrict transactions between US firms and internet, telecommunications and tech companies from “anti-foreign” countries such as China, Russia, Cuba, Iran, North Korea and Venezuela. was built for.
Amid growing concern over the possibility of data theft and access disruption by Beijing, one of the sources said, the office is particularly focused on Chinese cloud providers.
The Trump administration issued a warning in August 2020 against Chinese cloud providers, including Alibaba, for “withholding the most sensitive personal information of US citizens and the most valuable intellectual property of our businesses … our foreign adversaries.”
Cloud servers are also seen as ripe for hackers to launch cyber attacks because they can hide the origin of the attack and provide access to a wider range of client networks.
While there are very few public cases of the Chinese government forcing a tech company to turn over sensitive customer data, indictments of Chinese hackers reveal the use of cloud servers to gain access to private information.
For example, hackers affiliated with the Chinese Ministry of State Security broke into HPE’s cloud computing service and used it as a launch pad to attack customers, in what US prosecutors say was an attempt to promote Chinese economic interests. was an attempt. ,
“Pillar of Growth”
Alibaba, the world’s fourth-largest cloud provider, has nearly 4 million customers and describes its cloud business as a “second pillar of growth,” according to research firm Canalys. It saw revenue grow 50% in 2020 to $9.2 billion, although the division accounts for just 8% of total sales.
According to the press release, it has claimed business relationships with units of top US companies including Ford Motor Company, IBM’s Red Hat and Hewlett Packard Enterprise.
While broader Trump-era powers do not cover foreign subsidiaries of US companies, US regulators have previously found ways to link them to their US parent companies, which in turn could be subject to sanctions.
Before the technical tensions between the United States and China began to boil, Alibaba had big ambitions for its US cloud business. In 2015, it launched its first cloud computing hub outside China in Silicon Valley, with Amazon.com Inc., Microsoft Corp. and Alphabet Inc. plans to compete with Google. It later added additional data centers there and in Virginia. A person familiar with the matter says the company scaled back its US gamble during Trump’s presidency as tensions with China escalated.
In 2018, US officials blocked a bid by Alibaba-affiliated Ant Financial, now Ant Group, to acquire American money transfer company MoneyGram International Inc., over national security concerns. But a move to put Ant Group on a trade blacklist failed and an executive order banning its mobile payments app Alipay was quashed by Biden.
Like Trump, Biden has also imposed more and more sanctions on Chinese companies. Last month, the US government banned investment and exports from dozens of Chinese firms, including top drone maker DJI, accusing them of persecution of China’s Uyghur minority or helping the military.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)
,