Amazon surrenders cheapest bit of Chinese cloud

Gladys Abbott
November 15, 2017

Beijing Sinnet Technology said Tuesday it would buy parts of Amazon's (NASDAQ: AMZN) cloud business in China for up to two billion Chinese yuan ($301 million U.S.), but the US e-commerce giant said it was not exiting the world's second-largest economy.

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".

In a regulatory filing on Monday, Sinnet said the purchase would help it to "comply with China's laws to further improve the company's AWS cloud services" in terms of quality and security.

"‎We're excited about the significant business we have in China and its growth potential".

Reuters had earlier reported that Amazon.com Inc is selling off the hardware from its public cloud business in China, amid increased regulation over online data which is creating a hurdle for technology firms operating in the world's second-largest economy.

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

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Sinnet has told customers it has been told by the government to close VPNw which circumvent the Great Firewall. Some U.S. -based trade groups say that China has repeatedly lent deaf ears to the requests by U.S. firms on giving access to Chinese markets just like the Chinese firms get in the U.S. However, the Trump administration has hardly done anything to address the issue.

Amazon's decision casts a shadow over similar ventures in the country.

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

With Alibaba's cloud services expanding rapidly, it looks as if China is resolved to sit on its own cloud.

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.

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