Amazon.com Inc. agreed to sell some of its Chinese cloud assets to its local partner but said it’s committed to a domestic market for internet-based computing that could be worth $30 billion.
Beijing Sinnet Technology Co. will buy servers and other unspecified “operational assets” in the country’s capital from Amazon Web Services for as much as $302 million, it said in a filing to the Shenzhen stock exchange. The sale is intended to comply with government regulations and improve service, it said.
Amazon’s business in China has been hollowed out by the rise of local rival Alibaba Group Holding Ltd., which has come to dominate e-commerce and is expanding in cloud computing with new data centres. Amazon, the global leader in internet computing, is vying for a slice of domestic spending on cloud services and gear that IDC estimates will reach $30 billion by 2021. But the US company has to deal with laws introduced this year that mandate the storage of data within the country and bolster government control over the movement of information.
On Tuesday, the e-commerce giant 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 emailed statement. “We’re excited about the significant business we have in China and its growth potential over the next number of years.” Calls to Sinnet’s investor relations office went unanswered. Amazon controlled more than 40 percent of the global market for public cloud services in 2016, well ahead of Microsoft Corp. and Alibaba, Gartner estimates.