Amazon sells off China cloud assets in line with rules

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Amazon.com Inc is selling off the hardware from its public cloud business in China, amid tightening regulation over online data in the world’s second-largest economy.

Beijing Sinnet Technology Co Ltd, Amazon’s China partner, said in a filing late on Monday that it would buy the US firm’s Amazon Web Services (AWS) public cloud computing unit in China for up to two billion yuan (301.2 million US dollars).

"In order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet," an AWS spokesman said on Tuesday, adding AWS would still own the intellectual property for its services worldwide.

"‎We’re excited about the significant business we have in China and its growth potential."

Chinese regulators are tightening rules on foreign data and cloud services, implementing new surveillance measures and increasing scrutiny of cross-border data transfers. Laws that came into effect in June require firms to store data locally.

"This move is mostly around regulatory compliance," said Charlie Dai, Beijing-based analyst at Forrester Research. He added the move was necessary for AWS to build up its other business areas in the market.

The cloud service sector in China is now teeming with players, with tech juggernauts such as Alibaba and Amazon competing with smaller firms./ Reuters Photo.‍

AWS has a separate hardware venture in partnership with the Ningxia provincial government in northwest China. Amazon said on its website that its public cloud services in the country are exclusively managed by Sinnet.

Global firms in China, including Apple Inc, have this year transferred data to Chinese ventures overseen by local authorities. Microsoft operates its Azure cloud services unit in partnership with China-based 21Vianet Group.

"We expect other foreign players, such as Oracle and IBM, will also ensure regulatory compliance as long as they want to provide public cloud services in China," said Dai.

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

Chinese firms account for roughly 80 percent of total cloud services revenue in China, and roughly half of the data center market in 2017, according to Synergy Research Group.

Source(s): Reuters