Amazon Sells Portion Of Business For $300 Million Because Of Chinese Law

Amazon Sells Portion Of Business For $300 Million Because Of Chinese Law

Amazon Sells Portion Of Business For $300 Million Because Of Chinese Law

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's Chinese partner, Beijing Sinnet Technology Co, said it would purchase Amazon's Chinese web services assets for up to 2 billion yuan (A$394 million) to comply with Chinese regulations.

The spokesperson added that the company was excited about its business in China and its potential for growth.

Chinese regulators are tightening rules on foreign data and cloud services, including new surveillance measures and increased scrutiny of cross-border data transfers.

Charlie Dai, a Beijing-based analyst at Forrester Research, feels that the move was necessary for AWS to improve its other business areas in the market.

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Amazon said that it will sell few physical assets only and own the intellectual property of Amazon Web services (AWS) worldwide.

"Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services", AWS said, according to The Wall Street Journal. But the USA company has to deal with lawsintroduced this year that mandate the storage of data within the country and bolster government control over the movement of information.

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.

The move places a big shadow over foreign ventures of a similar nature in China.

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. Apple eliminated VPNs from its app store in July 2017, as Chinese government restricted the use of such services. The sale is meant to comply with government regulations and improve service, it said.

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