US Probes Alibaba’s Cloud Unit Security on US Consumer Data Concerns

The Biden administration is looking at Alibaba’s cloud business and determining whether that facet of the eCommerce titan is a risk to U.S. national security, Reuters reported Tuesday (Jan. 18).

The probe will look into how Alibaba stores U.S. client data, including personal info and intellectual property, and will try to identify whether the Chinese government has the ability to gain access to it. The government is also currently looking more into Chinese tech firms.

The report notes that U.S. regulators could ultimately choose to make the company take measures to cut risks associated with its cloud business, and could also make it so that Americans — both at home and abroad — can’t use the service at all.

Alibaba’s cloud business is a small one and has an annual revenue of less than $50 million, per data from Gartner Inc. Regulators might end up crimping it even more if they block transactions between American companies and its cloud.

While Alibaba declined to comment for the Reuters report, the company did have previous concerns that operating in the U.S. could be problematic.

It outlined these concerns in a recent annual report, saying the U.S. companies working with Alibaba via contract “may be prohibited from continuing to do business with us, including performing their obligations under agreements involving our … cloud services.”

The Alibaba probe was initially helmed by the Trump administration, in a bid to use broad new powers to try and curb activity between the U.S. and “foreign adversary” companies like China, Russia and others. The office has focused particularly intensely on Chinese cloud providers because of a fear of the potential for data theft and access disruption from Beijing.

PYMNTS wrote recently that Alibaba and Tencent were both fined by China for reportedly failing to report details about deals.

Read more: China Fines Tencent, Alibaba For Failing to Report Deals 

The companies were penalized 500,000 yuan each for around a dozen deals. There has been a stricter outlook on reporting deals, especially amid Big Tech firms, as the two companies were among around 40 others that didn’t report deals.