Amazon sells part of Chinese cloud computing business
Amazon sells part of Chinese cloud computing business
Is all that other stuff you are doing really important?. If it's not frankly stop doing it. Image ALotOfPeople Getty Images iStock
15 November, 2017, 01:21
The U.S. company has agreed to sell its China-based web services business to Beijing Sinnet, the local partner that operates it, according to a filing on the Shenzhen Stock Exchange that was noted by The Wall Street Journal and Reuters.
"In order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet", said AWS earlier today.
"AWS did not sell its business in China and remains fully committed", the company said in an emailed statement.
Amazon launched its web services business - better known as AWS - in China in 2014.
Sinnet told its customers in August it would be shutting down its VPNs and other network services that allowed its users to circumvent the "Great Firewall System" of China that controls censorship, citing the government's direct instructions.
"Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services", the US firm said.
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.
AWS has another hardware venture with the provincial government in Ningxia located in the northwest region of China. The service has outperformed its competitors throughout the world with a market share of over 40% globally in 2016, much more than Microsoft and Alibaba, according to Gartner. In China, regulations require Amazon to operate via a local partner before offering the services to customers.
The move places a big shadow over foreign ventures of a similar nature in China. Foreign firms have repeatedly complained about the biased regulations in China that favor the local companies.
Amazon shares acquired 50 cents to $1,129.67 mid-morning Tuesday.
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