AWS Sells Chinese Cloud Assets Amid Tightening Regulations

15 November, 2017, 00:55 | Author: Terri Saunders
  • Is all that other stuff you are doing really important?. If it's not frankly stop doing it. Image ALotOfPeople Getty Images  iStock

The 2 billion yuan (US$301.2 million) transaction was arranged in order to comply with national security laws that prevent non-Chinese companies from owning certain critical infrastructure assets, including those involved with the delivery 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.

Beijing Sinnet Technology said Tuesday it would buy parts of Amazon's (NASDAQ: AMZN) cloud business in China for up to two billion Chinese yuan ($301 million U.S.), but the US e-commerce giant said it was not exiting the world's second-largest economy.

Charlie Dai, a Beijing-based analyst at Forrester Research, feels that the move was necessary for AWS to improve its other business areas in the market. Sinnet asked its customers earlier this year to stop using virtual private networks, which are able to circumvent China's Great Firewall. AWS is significantly ahead of the competition across the world, but in China it must operate via local partners due to regulation. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters.

Amazon's decision casts a shadow over similar ventures in the country.

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The new law also says that China-based data must be stored locally.

Global firms in China, including Apple Inc, have this year transferred data to Chinese ventures overseen by local authorities. Microsoft, Oracle and IBM did not immediately respond to request for comment on Tuesday.

Sinnet owns eight data centres with more than 40,000 racks, according to its listing on AWS's partner directory.

Whereas AWS is the public cloud leader globally, it has struggled to crack a Chinese market that has traditionally been served by its own tech firms.

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