The Department published the list earlier this month, and Alibaba argues in its lawsuit that the designation violates the company’s rights to constitutional due process and free speech, Bloomberg reported Tuesday.
Alibaba said it is neither a Chinese military company nor a military-civil fusion, and the company said that the Defense Department did not reply to evidence the company presented showing that it is not a supporter of the Chinese military, according to the report.
A company’s inclusion on the Defense Department’s list can restrict its ability to contract with the U.S. military, can limit its ability to receive research funding, and can signal more punitive trade restrictions in the future, the report said.
Alibaba got its start as an eCommerce company but has since become one of the leading artificial intelligence companies in China, per the report.
Reuters also reported on the lawsuit Tuesday and said that on June 8, the Department of Defense expanded its list of businesses linked to China’s military to include 188 entities.
Alibaba said, per the report: “The determinations have no basis in fact or law. Alibaba is governed by an independent board, none of whom has any military affiliation. Its products and services are built for retail, logistics, and enterprise information technology — not weapons, defense, or intelligence.”
The Defense Department said in a June 8 press release that it identified the 188 companies included on the list after conducting its due diligence.
“The Department will update the list with additional entities as appropriate,” it said. “The United States Government reserves the right to take additional actions on these entities under authorities other than Section 1260H.”
Section 1260H is the statutory requirement of the National Defense Authorization Act for Fiscal Year 2021 under which the Department updated the list.
In the list, the Department of Defense said Alibaba Group is indirectly affiliated with China’s State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) and is affiliated with the country’s Ministry of Industry and Information Technology (MIIT), making the company a military-civil fusion contributor to China’s defense industrial base.
