Amazon Spins off Cloud Business to Chinese Firm

Is all that other stuff you are doing really important?. If it's not frankly stop doing it. Image ALotOfPeople Getty Images  iStock

Is all that other stuff you are doing really important?. If it's not frankly stop doing it. Image ALotOfPeople Getty Images iStock

"AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS's industry leading cloud services.", said a spokesperson. "‎We're excited about the significant business we have in China and its growth potential over the next number of years". Amazon said on its website that its public cloud services in the country are exclusively managed by Sinnet. 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.

Beijing Sinnet Technology said that it would buy a part of Amazon's cloud computing business in China for up to 2 billion Chinese yuan ($301 million) on November 14. Sinnet asked its customers earlier this year to stop using virtual private networks, which are able to circumvent China's Great Firewall.

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

Charlie Dai, a Beijing-based analyst at Forrester Research, feels that the move was necessary for AWS to improve its other business areas in the market.

A Cyber Security Law (CSL) came into effect back in June, requiring certain companies to hold data within China and to undergo on-site security laws. If the company intends to continue functioning in China, it has to cooperate with local partners, that often have some degree of government oversight, an AWS spokesman explained.

Whereas the European Union sees foreign cloud services as a source of revenue - fining them billions whenever they can think up some legal infraction they may have committed - China is obliging foreign cloud service providers to sell their assets to China-based companies which come under state control.

Whereas AWS is the public cloud leader globally, it has struggled to crack a Chinese market that has traditionally been served by its own tech firms. Foreign firms have repeatedly complained about the biased regulations in China that favor the local companies.

On Monday, Amazon shares closed up 0.34% at $1,129.17.

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