Business

Amazon to sell China cloud unit for $300m

Chinese regulators are tightening rules on foreign data and cloud services.
Chinese regulators are tightening rules on foreign data and cloud services.
Update and correction:

Amazon Web Services issued this statement following the publication of this Reuters story:

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 provision 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-record 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.

A mazon.com's Chinese partner, Beijing Sinnet Technology, said it would purchase Amazon's Chinese Web services business for up to two billion yuan ($301 million), ending the US firm's cloud computing business in the country.

Sinnet, which began operating the Amazon services in August 2016, said in a filing late on Monday that the pending purchase would help the unit "comply with local laws and regulations and further improve service quality and security".

Amazon did not immediately respond to a request for comment on Tuesday morning.

Chinese regulators are tightening rules on foreign data and cloud services, including new surveillance measures and increased scrutiny of cross-border data transfers.

In August, Sinnet told customers it would begin shutting down VPNs and other services on its networks that allow users to circumvent China's Great Firewall, citing direct instructions from the government.

The changes are linked to new national cyber laws that came into effect in 2017, which make network providers liable for content deemed dangerous or offensive to "socialist values".

In 2013, Amazon's Web services business signed agreements with provincial governments in China, and previously worked with some of China's largest tech firms, including Xiaomi, Qihoo 360 Technology and Kingsoft.

Cloud services have become a crowded and competitive field in China in recent years, with Alibaba Group's cloud unit opening over a dozen overseas data centres since 2016.

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