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US investigates Alibaba's cloud unit for national security risks: Sources



(Reuters) – Biden administration examines e-commerce giant Alibaba's cloud operations to determine if it poses a risk to US national security, according to three people informed of the matter, as the government increases scrutiny of Chinese technology companies & # 39; contacts with US companies.

The focus of the survey is on how the company stores US customers' data, including personal information and intellectual property rights, and whether the Chinese government can access it, the people said. The potential for Beijing to disrupt US users' access to their information stored on Alibaba clouds is also a problem, said one person.

U.S. Regulators may ultimately choose to force the company to take action to reduce the risks of cloud operations or to ban Americans at home and abroad from using the service entirely.

Former President Donald Trump's trade department was concerned about Alibaba's cloud operations, but the Biden administration initiated the formal review after he took office in January 2021

, according to one of the three people and a former Trump administration official.

Alibaba's US cloud business is small, with an annual income of less than an estimated $ 50 million, according to research firm Gartner Inc But if regulators ultimately decide to block US-Alibaba Cloud transactions, it could hurt the end result of one of the company's most promising companies and strike a blow to the company's reputation as a whole.

A spokesman for the Department of Commerce said the agency did not comment on "the existence or non-existence of transactions ion reviews." The Chinese Embassy in Washington did not respond to a request for comment.

Alibaba declined to comment. It flagged similar concerns about operating in the US in its latest annual report, saying that 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.


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