Saturday, 18 November, 2017

Amazon sells key AWS China assets to local partner, regulatory compliance cited

Amazon surrenders cheapest bit of Chinese cloud AWS sells China hardware to local cloud partner
Mae Harvey | 15 November, 2017, 01:21

AWS first launched a China service in 2014, but must operate via local partners to comply with Chinese law, with companies required to store data locally in legislation enacted in June. Thus, to comply with the Chinese law, it sold "certain physical infrastructure assets" to Sinnet, who has been operating the Amazon services since August 2016.

Amazon.com Inc (NASDAQ:AMZN) has agreed to sell part of its cloud computing business in China, to Beijing Sinnet Technology, in a deal worth 2bn Yuan or US$301mln.

However, like its peers, Amazon has found it hard making headway in China, which is dominated by local tech giants Alibaba and Tencent Holdings Ltd.

Apple, Facebook and Google have all made similar choices, some which show they are essentially selling out to China, a country with a lack of freedoms when it comes to the internet, the natural foundation of these tech companies' operations and services.

On Tuesday, the e-commerce giant rejected media reports tying its asset sale to an imminent departure from the Chinese market.

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In a statement Amazon emphasised that it had not sold its business in China, saying that it "remains fully committed to ensuring Chinese customers continue to receive AWS's industry leading cloud services". Microsoft already operates its Azure cloud service in China with the China-based company 21Vianet Group.

Calls to Sinnet's investor relations office went unanswered.

With Alibaba's cloud services expanding rapidly, it looks as if China is resolved to sit on its own cloud. Foreign firms there have long complained about local restrictions that appeared to favor domestic players.

Sinnet owns eight data centres with more than 40,000 racks, according to its listing on AWS's partner directory.

"Amazon is definitely not giving up on China, in fact they're going to be even bigger here" because of plans to build another datacenter, she said, Bloomberg reported.

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