Alibaba’s Cloud Unit Screened for National Security Risks by the US

As the US government ramps up scrutiny of Chinese tech companies’ dealings with firms in the United States, the e-commerce giant Alibaba’s cloud business has found itself under review by the Biden administration trying to determine whether it poses a risk to the country’s national security.

Citing three people briefed on the matter, Reuters points that the probe is focused on how Alibaba is storing the data, including personal information and intellectual property, of its US clients and if China’s government could access their database.

Another concern, according to one of the sources, is the potential for Beijing to disrupt access by US users to their information stored on the Alibaba cloud.

The formal review of Alibaba’s cloud business was launched in January by the Biden administration after he took office although the concerns regarding the Chinese company were raised by the Commerce Department during former President Donald Trump’s administration.

The probe can ultimately result in US regulators forcing Alibaba to take measures aimed at reducing the risks posed by its cloud business or prohibit Americans from using the service altogether at home or abroad.

The research firm Gartner Inc. points that although Alibaba has a small cloud business in the US that generates annual revenue of less than $50 million, banning the e-commerce giant’s transactions with American firms would seriously damage its most promising businesses on top of blemishing its reputation.

Though refusing to comment on the probe, Alibaba was obviously well aware of the emerging issues since it has flagged in its annual report similar concerns raising the possibility for the US companies to be prohibited from doing business with it.

Back in 2018, Alibaba affiliate Ant Financial – now Ant Group – launched a bid to acquire MoneyGram International Inc, the US money transfer company, but the bid was blocked by the US authorities citing national security concerns which also banned its mobile payment app Alipay, but Biden revoked the executive order with the ban and the efforts to put Ant Group on a trade blacklist have also failed.

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