Amazon Spins off Cloud Business to Chinese Firm

Global Cloud Computing Market 2017-2022 : Amazon Web Services, Aliyun, Microsoft Azure, Google Cloud Platform and IBM

Amazon.com Inc (NASDAQ:AMZN) has agreed to sell part of its cloud computing business in China, to Beijing Sinnet Technology, in a deal worth 2bn Yuan or US$301mln.

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

Amazon is committed to establish in China, and is looking forward for significant business opportunities and growth potential for the next few years. He added the move was necessary for AWS to build up its other business areas in the market. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters.

Amazon has made it clear that it is selling only "certain physical assets", and retains the ownership of intellectual property for AWS (Amazon Web Services) worldwide. Sinnet asked its customers earlier this year to stop using virtual private networks, which are able to circumvent China's Great Firewall.

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

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

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Microsoft, Oracle and IBM are likely to follow suit.

A Cyber Security Law (CSL) came into effect back in June, requiring certain companies to hold data within China and to undergo on-site security laws.

Big name tech companies in the US often bend over backward to either attempt to penetrate the highly protected Chinese market, or maintain a somewhat established presence.

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

According to Synergy, 80% of China cloud services are provided by China companies and about 50% of China based data centres are owned by China-based organisations.

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