Published: Wed, November 15, 2017
Markets | By Noel Gibbs

Amazon Spins off Cloud Business to Chinese Firm

Amazon Spins off Cloud Business to Chinese Firm

Beijing Sinnet Technology said that it would buy a part of Amazon's cloud computing business in China for up to 2 billion Chinese yuan ($301 million) on November 14. "As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet".

In a statement to TechCrunch, the online retail giant said it is not parting ways with its business in China, and will continue to offer the industry-leading cloud services to its customers in China.

Amazon will still possess the intellectual property for its AWS services. "‎We're excited about the significant business we have in China and its growth potential over the next number of years".

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Amazon said via a post on its website that its China public cloud services were managed exclusively by Sinnet. Microsoft already operates its Azure cloud service in China with the China-based company 21Vianet Group. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters.

Amazon's China based cloud business already had been facing tough rules due to the tight controls China has on the internet.

The deal between Amazon and Sinnet is possibly connected with what is called the Great Firewall of China, the government's increasingly vice-like grip over Internet access in the country.

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Amazon controlled more than 40 percent of the global market for public cloud services in 2016, well ahead of Microsoft Corp. and Alibaba, Gartner estimates.

Sinnet said in a regulatory filing on Monday the move would allow the company to comply with China's legal framework.

Amazon's decision casts a shadow over similar ventures in the country. But like its peers, the company has had trouble making headway in China, which is dominated by local tech giants Alibaba and Tencent Holdings Ltd. Foreign firms have repeatedly complained about the biased regulations in China that favor the local companies.

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