Amazon Spins off Cloud Business to Chinese Firm

Posted November 15, 2017

Both the Wall Street Journal and Reuters had reported that the China partner had notified investors that it was about to buy AWS's China business for 2 billion yuan ($301.2 million). "As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet".

"No, AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS's cloud services", Amazon told MyBroadband.

According to the company, it is selling hardware to comply with laws that forbid ownership or operation of certain types of cloud technology.

Sinnet, which began operating the Amazon services in August 2016, said in a filing late on Monday the pending purchase would help the unit "comply with local laws and regulations and further improve service quality and security".

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

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's Chinese equivalent, Alibaba, leads the way having launched its own public cloud service in 2009 before expanding globally.

Amazon's decision casts a shadow over similar ventures in the country. The sale is meant to comply with government regulations and improve service, it said. Foreign firms there have long complained about local restrictions that appeared to favor domestic players.

They would go under the strict regulatory scrutiny from the Chinese government. Some U.S. -based trade groups say that China has repeatedly lent deaf ears to the requests by U.S. firms on giving access to Chinese markets just like the Chinese firms get in the U.S. However, the Trump administration has hardly done anything to address the issue.

Amazon shares acquired 50 cents to $1,129.67 mid-morning Tuesday.