Due to the constricting regulations on online data for technology companies operating in China, Amazon.com Inc is liquidating the hardware from its public cloud business in the world’s second-largest economy.
Amazon’s China partner, Beijing Sinnet Technology Co Ltd, had stated it would purchase the U.S. firm’s Amazon Web Services (AWS) Chinese public cloud computing unit for up to 2 billion yuan ($301.2 million).
“In order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet,” said an AWS spokesman and adding that AWS still possesses sole ownership of its intellectual property for its worldwide services. “We’re excited about the significant business we have in China and its growth potential.”
Chinese officials continue to constrict the rules on foreign data and cloud services by applying different surveillance methods and increasing the inspection of international data transfers. In June, laws that came into effect that require companies to store data locally.
“This move is mostly around regulatory compliance,” said Charlie Dai, analyst. He believes that the sale was crucial for AWS to boost its other business areas.
AWS has another partnership in hardware venture with the Ningxia government in China’s northwest and Amazon states on its website that its public cloud services in the country are wholly managed by Sinnet.
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Amazon’s cloud business has already encountered strict rules due to China’s stern internet limitations. In August, Sinnet told customers that it would turn off VPNs and its networks which allow users to bypass China’s Firewall system of suppression quoting instructions from the government.
Microsoft Corp and IBM Corp are some on the tech companies that are also encountering stricter regulations in localizing their data storage units. This year, global firms in China, such as Apple Inc have moved data to Chinese ventures supervised by local authorities. Microsoft runs 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.