Amazon's denies Cloud leaves China

Amazon's denies Cloud leaves China

Beijing Sinnet Technology said Tuesday it would buy parts of Amazon's cloud business in China for up to 2 billion Chinese yuan ($301 million), but the US e-commerce giant said it was not exiting the world's second-largest economy. "‎We're excited about the significant business we have in China and its growth potential over the next number of years".

It looks like Amazon is removing itself from the Chinese cloud services industry on account of stringent new data laws that went live in the country earlier this year. In June of this year, new laws came into effect that now require all foreign businesses operating in China to store their user data locally and this has been a cause for concern among worldwide companies currently doing business in the region.

"This move is mostly around regulatory compliance", said Charlie Dai, Beijing-based analyst at Forrester Research.

The transaction's goal is to fully comply with China's laws and regulations, while improving the security and service quality of Sinnet's operation of Amazon Web Services.

Amazon's cloud business in China already faced tougher rules due to China's tight internet controls.

In 2013 Amazon's web services business signed agreements with provincial governments in China, and has previously worked with some of China's largest tech firms including Xiaomi, Qihoo and Kingsoft. Microsoft Corp, Oracle Corp and IBM Corp are also facing tough new regulatory challenges in localizing their data storage units.

Furthermore it adds additional restrictions on cross-border data transfers. Microsoft operates its Azure cloud services unit in partnership with China-based 21Vianet Group.

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.

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