A potential U.S. ban on Alibaba’s cloud unit lingers as the government speeds up inquiries of Chinese technology companies. Alibaba’s cloud business is under scrutiny to determine if it poses a threat to U.S. national security.
U.S. probes if Chinese govt has access to Alibaba’s cloud information
A warning issued in August 2020 by the Trump administration stated, “to prevent U.S. citizens’ most sensitive personal information and our businesses’ most valuable intellectual property from being stored and processed on cloud-based systems accessible to our foreign adversaries.”
Furthermore, since President Biden took office in January, Alibaba has been under strict review. The investigation could lead to a potential U.S. ban for Alibaba’s cloud unit.
Various sources informed Reuters that the investigation focuses on Alibaba’s data storage practices.
Not only storage but the regulators are trying to determine if the Chinese government has access or can block access to the data on the Alibaba cloud.
The Commerce Department also mentioned that the agency refuses to comment on the “existence or non-existence of transaction reviews.”
However, Alibaba declined to comment.
U.S. office concerned over data theft access disruption by Beijing
Chinese cloud providers are under severe scrutiny over concerns of data theft. The Trump administration created a small office within the Commerce Department. This small office was known as the Office of Intelligence and Security.
The office has powers to ban or restrict transactions between U.S. firms, the internet, and tech companies. The ban could be on “foreign adversary” nations like Cuba, Iran, North Korea, China, Russia, and Venezuela.
However, research firm Canalys says Alibaba is the world’s fourth-largest cloud provider. With approximately 4 million customers and a 50% rise in revenue to $9.2 billion in 2020, Alibaba is the “second pillar of growth.”
Even though the Trump administration did not cover foreign subsidiaries, U.S. regulators have discovered ways to link them to U.S. parent companies. By doing so, U.S companies can be under restrictions.
Alibaba and The United States
Alibaba had launched a cloud computing hub in Silicon Valley in 2015. The Alibaba hub was the first hub outside China and aimed to compete with Microsoft Corp, Alphabet Inc’s Google, and Amazon.com Inc.
Furthermore, as U.S and China relations deteriorated, the Biden administration has placed rigid restrictions on Chinese companies.
Even though Alibaba refused to make an official comment, they stated in their annual report that U.S. companies in business with Alibaba “may be prohibited from continuing to do business with us, including performing their obligations under agreements involving our cloud services.”
Alibaba also boosts its relationship with the U.S. companies such as Hewlett Packard Enterprise, IBM’s red Hat, and Ford Motor Co.
It is almost certain that there is a potential U.S. ban on Alibaba’s cloud unit shortly. The rigorous investigation into Chinese tech companies over hacking issues or data theft has caused serious concerns among the Biden administration.