US authorities are currently investigating Alibaba’s cloud computing activities. If they come to the conclusion that the Chinese giant poses a risk to the country’s national security, they could ban Americans from using its cloud service.
A mistrust that does not date from yesterday
It is a small committee linked to the Department of Commerce that examines the file. Named the Office of Intelligence and Security, it was created under the Trump administration to wield sweeping new powers to prohibit or restrict transactions between US companies and internet, telecom and technology companies from so-called “adversary” countries. foreign countries” such as China, Russia, Cuba, Iran, North Korea and Venezuela, the news agency reports. Reuters.
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The investigation into Alibaba’s cloud division was nonetheless launched at the instigation of the Biden administration shortly after the Democrat took office. The investigation is particularly interested in how the company stores the data of its American customers, including their personal information and intellectual property, as well as the possibility for the Chinese government to have access to it.
In addition, investigators want to know if Beijing is able to prevent US customers of Alibaba from accessing their data. This distrust on the part of the White House towards the firm founded by Jack Ma is not new: in 2020, the Trump administration issued a warning against Chinese cloud providers aimed at “ prevent the most sensitive personal information of US citizens and the most valuable intellectual property of our companies… from being stored and processed on cloud-based systems accessible to our foreign adversaries “.
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Since 2019, the United States has been scrutinizing large companies from China very closely. Photography: Caleb Fisher / Unsplash
Alibaba’s cloud business is currently very promising
If Alibaba is better known in the e-commerce sector, the Chinese giant also wants to play its part in the field of cloud computing, which has grown enormously in popularity since 2020 and the Covid-19 pandemic. That same year, the company announced an investment of $18 billion in the cloud until 2023.
Alibaba had big ambitions in the United States for its cloud service. In 2015, it launched an IT hub dedicated to this technology in Silicon Valley with the desire to come and compete with the big American names in the sector. Additional data centers were later added in California and then Virginia. However, Trump’s coming to power has reshuffled the cards; Faced with the threat, Alibaba has largely reduced its activities across the Atlantic.
Today, Alibaba’s cloud business in the United States is minimal with annual revenue of around $50 million. Globally, however, the company is the fourth cloud provider after the three American giants Amazon Web Services, Microsoft and Google. The Chinese firm has nearly 4 million customers, and considers cloud computing as its second most promising activity after e-commerce. Its cloud division has seen its revenues increase by 50% to reach $9.2 billion in 2020.
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If the US authorities decide to crack down, they could do so in different ways: either by asking companies collaborating with Alibaba to take measures to reduce the risks posed by the latter, or in a much more brutal way, by outright banning Americans, at home and abroad, to use this service.
If the latter option is chosen, then Alibaba would likely be placed on the notorious blacklist, where many Chinese companies are listed, like Huawei, preventing them from doing business with any US firm. The White House can also do it differently. Last month, for example, the US government imposed investment and export restrictions on dozens of Chinese companies, including drone maker DJI, accusing them of being complicit in the oppression of the Uyghur minority in China or to help the army.
Such a measure against Alibaba’s cloud activities would be highly damaging to it, particularly to its reputation. In addition, the firm has boasted of maintaining commercial relations with American giants such as IBM and Ford, the latter would be strongly affected. Taking into account the current geopolitical climate between China and the United States, which have been waging a merciless trade war since 2019, the Americans could strike a blow by sanctioning Alibaba, one of the most powerful companies in the Empire. from the Middle, but also from all over the world.