US national security officials reviewing Alibaba’s cloud business: report

Associated Press/Ng Han Guan

The Biden administration is assessing if Alibaba’s cloud business presents a threat to U.S. national security.

Three people briefed on the matter said the review would look into how the company stores U.S. clients’ data and seek to determine if the Chinese government had access to it, according to Reuters.

Former President Trump’s Commerce Department previously raised concerns about Alibaba’s cloud business, and the Biden administration launched a formal review of the company following President Biden’s inauguration, according to Reuters, citing one of the three people and a former Trump administration official.

The probe comes as the government is increasing its scrutiny over Chinese technology companies and their dealings with American companies. As a result, U.S. regulators could choose to require that the company reduce certain risks or it could bar Americans from using the service entirely.

Though the company declined to comment, Alibaba’s most recent annual report cited concerns about working with U.S. companies, saying that American clients “may be prohibited from continuing to do business with us, including performing their obligations under agreements involving our … cloud services,” Reuters noted.

Alibaba’s cloud business in the U.S. has an annual revenue of about $50 million, a fraction of the company’s tens of billions in annual revenue worldwide. 

In August 2020, the Trump administration warned against using Chinese cloud providers like Alibaba “to prevent U.S. citizens’ most sensitive personal information and our businesses’ most valuable intellectual property … from being stored and processed on cloud-based systems accessible to our foreign adversaries,” Reuters also reported.

Prior to escalating tensions between China and the U.S., Alibaba opened its first cloud computing hub outside of China in Silicon Valley. However, a person familiar with the matter told Reuters that the company scaled back efforts to expand in the U.S. during the Trump presidency amid rising tensions between the U.S. and China.

The Hill has reached out to Alibaba and the Commerce Department for comment.

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