Wed, Nov 15, 2017 - Page 10 News List

Amazon to sell cloud assets to Chinese partner

Bloomberg

Amazon.com Inc has agreed to sell some of its Chinese cloud assets to its local partner, but said it is committed to a domestic market for Internet-based computing that could be worth US$30 billion.

Beijing Sinnet Technology Co (北京光環新網科技) is to buy servers and other unspecified “operational assets” in the nation’s capital from Amazon Web Services (AWS) for as much as 2 billion yuan (US$302 million), it said in a filing to the Shenzhen Stock Exchange.

The sale is intended to comply with government regulations and improve services, it said.

Amazon’s business in China has been hollowed out by the rise of local rival Alibaba Group Holding Ltd (阿里巴巴), which has come to dominate e-commerce and is expanding in cloud computing with new data centers.

Amazon, the global leader in Internet computing, is vying for a slice of domestic spending on cloud services and gear that IDC estimates would reach US$30 billion by 2021, but the US company has to deal with laws introduced this year that mandate the storage of data within the nation and bolster government control over the movement of information.

The e-commerce giant yesterday rejected media reports tying its asset sale to an imminent departure from the Chinese market. It said instead it was selling hardware to comply with laws that forbid ownership or operation of certain types of cloud technology.

“AWS did not sell its business in China and remains fully committed,” the company said in an e-mailed statement. “We’re excited about the significant business we have in China and its growth potential over the next number of years.”

Calls to Beijing Sinnet’s investor relations office went unanswered.

Amazon controlled more than 40 percent of the global market for public cloud services last year, well ahead of Microsoft Corp and Alibaba, Gartner estimated, but like its peers, the company has had trouble making headway in China, which is dominated by local technology giants Alibaba and Tencent Holdings Ltd (騰訊).

Foreign firms there have long complained about local restrictions that appear to favor domestic players.

The arrangement between Amazon and Sinnet appeared to mirror a similar set-up between Microsoft and its local partner, 21Vianet Group Inc, IDC China managing director Kitty Fok said.

“Amazon is definitely not giving up on China, in fact they’re going to be even bigger here” because of plans to build another data center, she said.

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