Amazon Sells Cloud Assets in China Due to New Rules

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The buyout was an attempt to "comply with our country's laws and rules and further improve the security and the service quality of the AWS cloud-computing service operated by the company", Beijing Sinnet said.

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".

The company confirmed that it has sold off its Amazon Web Services (AWS) infrastructure to Sinnet, its local technology partner.

"Sinnet is responsible for ensuring that its customers in China comply with local laws and their notice was meant to remind customers of their obligations", an Amazon spokeswoman said via email at the time. "‎We're excited about the significant business we have in China and its growth potential over the next number of years".

Chinese regulators are tightening rules on foreign data and cloud services, including new surveillance measures and increased scrutiny of cross-border data transfers. Laws that came into effect in June require firms to store data locally.

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

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Amazon said AWS continues to own the intellectual property for Amazon Web Services worldwide.

In August, Sinnet told customers it would begin shutting down VPNs and other services on its networks that allow users to circumvent China's Great Firewall, citing direct instructions from the government.

Amazon's decision casts a shadow over similar ventures in the country. Oracle, Microsoft and IBM also face hard new regulatory challenging for localizing their own data storage units.

Multinational companies doing business in China, including Apple, have transferred data in 2017 to Chinese companies that are overseen by local governments.

Amazon controlled over 40 per cent of the global market for public cloud services in 2016, well ahead of Microsoft Corp and Alibaba, according to Gartner estimates.

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