November 15, 2017 6:30 am JST

Amazon selling off Chinese cloud hardware amid crackdown

US retail giant says it will keep offering net services in the country

SHUNSUKE TABETA, Nikkei staff writer

China's strict data governance is bringing companies as mighty as Amazon.com and Apple to heel. © Reuters

CHONGQING -- U.S. e-commerce heavyweight Amazon.com will sell equipment for its Chinese cloud services to a local partner to comply with new laws that have tied the hands of international operators reliant on the free flow of data.

Beijing Sinnet Technology has announced that it agreed Friday to purchase Amazon's servers and other cloud hardware. The Chinese information technology company will pay up to 2 billion yuan ($301 million) by methods to be settled later.

Some overseas media initially reported that Amazon would back out of cloud services in China. But the American company said it would keep offering the services. "In order to comply with Chinese law," Amazon "sold certain physical infrastructure assets to Sinnet," it said.

China's internet safety laws, which entered into force in June, require domestically gathered customer data that is stored locally or removed from the country to be screened by authorities. The rule makes it difficult to use data globally, greatly complicating operational strategies for many overseas companies, and countries including the U.S. have voiced concerns about the legislation's enforcement.

But many companies have had little choice but to comply. Apple, the American company behind the iPhone juggernaut, has said it will establish a data center in China, for instance.

President Xi Jinping spoke of stepping up cyber control at the twice-per-decade Communist Party congress last month, including references to "building a system to comprehensively govern the internet." Besides cloud services, Beijing is also tightening its grip on online expression, cracking down on virtual private networks often used to dodge internet restrictions and strictly regulating writings on platforms such as blogs.

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