Internet giant Amazon has announced that it plans to sell the hardware from its public cloud business in China. The announcement follows China’s plans to tighten its online data regulations, which is creating barriers for technology firms globally.
Amazon’s Chinese business partner Beijing Sinnet Technology Co Ltd. has said that it will purchase Amazon Web Services public cloud unit for around $300 million. “In order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet,” an Amazon spokesman said, adding Amazon would still own the intellectual property for its services worldwide.
Regulations in China are continuing to tighten for foreign data companies including cloud services. New laws introduced in June require technology companies to store data locally. This is part of the government’s plan to increase surveillance and increase the security of cross-border data transfers.
Amazon had previously faced tougher regulations due to tighter internet controls. Earlier in the year, Sinnet informed its customers that it would be closing down VPN’s along with other services on its network which weren’t compliant with China’s firewall system and censorship laws. Around 80% of cloud services and half of the data centre market in China is provided by Chinese companies.
According to Charlie Dai, Beijing-based analyst at Forrester Research “This move is mostly around regulatory compliance. He added that “The move is also necessary for AWS to build up its other business areas in the market.”
The move by Amazon is creating doubts among other technology companies. Microsoft, Oracle and IBM are all facing challenges when it comes to complying with China’s new regulations and laws. Companies are being advised by the government that they have to localise their data storage units.
A statement from a spokesperson says “We expect other foreign players, such as Oracle and IBM, will also ensure regulatory compliance as long as they want to provide public cloud services in China” Microsoft, Oracle and IBM have so far declined to comment on the future of their cloud services.
Competition among cloud service providers in China has become fierce in the last few years. The global cloud computing market is worth an estimated $20 billion, and Chinese based Alibaba Group Holding Ltd has opened dozens of units globally. The firm plans to expand further, and a recent company statement claims that “Our goal is to overtake Amazon in four years, whether that’s in customers, technology, or worldwide scale”