Amazon sells some of its cloud assets in China to comply with Chinese law

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Amazon Web Services (AWS) has reportedly sold some of its public cloud infrastructure assets in China to Sinnet Technology, Amazon’s China partner, in a deal worth US$301.2 Million (2 billion yuan). The reason behind this decision is increasing control of the internet and web services in China. The assets include servers and IT devices based on them.

However, AWS will still own the intellectual property for its services worldwide. This means, it is still committed to its customers in China and they will continue receiving the AWS services managed by Sinnet.

The new cybersecurity law imposed by the Chinese government states that all non-Chinese cloud computing providers entering Chinese cloud market need to offer IaaS in partnership with Chinese enterprises. This made Microsoft to offer its cloud services in cooperation with CenturyLink, and Oracle to partner with Tencent.

Amazon, back in September 2016, authorized Sinnet to operate its (AWS) cloud technologies and other related services in Beijing. Per Sinnet, the move was carried out in order to comply with the China’s local laws and compliances.

Amazon was continuously facing issues in operating its cloud business in China due to the tight internet controls. Sinnet also told its customers that it would shut down VPNs on its networks that allow customers to circumvent China’s Great Firewall system, because of government’s direct instructions.

Chinese government is working on tightening State’s rules on foreign data and cloud services and has been implementing new surveillance measures. It has also been increasing scrutiny of cross-border transfers that also require data to be stored locally.

Though, after this deal, AWS will face no service disruption, but it will certainly lose its Chinese market opportunity, as Sinnet will also be having a larger portion in profit arising from the sale in the Chinese region.

Chinese IaaS market is on a boom with Alibaba Cloud recording double cloud infrastructure revenue and achieving a mark of 1 million paying customers.

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