Amazon Agrees to Sell Some Cloud Assets to Chinese Partner

Amazon Agrees to Sell Some Cloud Assets to Chinese Partner

Amazon Agrees to Sell Some Cloud Assets to Chinese Partner

Amazon.com, Inc. (NASDAQ:AMZN) is selling some of its cloud business in China to its Chinese partner Beijing Sinnet Technology Co. for approximately 2 billion Yuan (U.S.$301.2 million). "In order to comply with Chinese law", Amazon "sold certain physical infrastructure assets to Sinnet", it said.

An AWS spokesperson said in a subsequent statement: "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".

Amazon will still possess the intellectual property for its AWS services.

"AWS sold certain physical infrastructure assets to Sinnet", it said.

One analyst based in Beijing said that the move by Amazon was mostly due to regulatory compliance.

In a TechCrunch article it was explained that Chinese law does not allow certain technologies to be owned by non-Chinese companies, so a transaction was required to continue the partnership between the companies in China. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters.

Earlier this year Apple transferred data to China-based companies.

The deal between Amazon and Sinnet is possibly connected with what is called the Great Firewall of China, the government's increasingly vice-like grip over Internet access in the country.

Amazon controlled over 40 per cent of the global market for public cloud services in 2016, well ahead of Microsoft Corp and Alibaba, according to Gartner estimates.

The move places a big shadow over foreign ventures of a similar nature in China. Foreign firms there have long complained about local restrictions that appeared to favor domestic players.

All these tech giants face a tight regulatory environment in China, which could be the primary reason that AWS China is quickly toeing the line before any unpleasantness occurs.

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