Visitors stand inside a booth introducing Alibaba Cloud services at an exhibition venue in Shenzhen, China. Picture: BOBBY YIP/REUTERS
US regulators could ultimately choose to force the company to take measures to reduce the risks posed by the cloud business or prohibit Americans at home and abroad from using the service altogether.Former president Donald Trump’s commerce department was concerned about Alibaba’s cloud business, but the Biden administration launched the formal review after he took office in January, according to one of the three people and a former Trump administration official.
Alibaba declined to comment. It did flag similar concerns about operating in the US in its most recent annual report, saying US companies that have contracts with Alibaba “may be prohibited from continuing to do business with us, including performing their obligations under agreements involving our ... cloud services”.
The Trump administration issued a warning in August 2020 against Chinese cloud providers including Alibaba, “to prevent US citizens’ most sensitive personal information and our businesses’ most valuable intellectual property ... from being stored and processed on cloud-based systems accessible to our foreign adversaries”.
For example, hackers connected to the Chinese ministry of state security penetrated Hewlett Packard Enterprise’s cloud computing service and used it as a launch pad to attack customers, plundering reams of corporate and government secrets for years in what US prosecutors say was an effort to boost Chinese economic interests.
Before tech tensions between the US and China started to boil, Alibaba had big ambitions for its US cloud business. In 2015, it launched a cloud computing hub in Silicon Valley, its first outside China, with plans to compete with Amazon, Microsoft and Google. It later added data centres there and in Virginia.
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