China Is Sitting On The Cloud

Microsoft ramps capacity as Amazon AWS calls its quits on the Chinese market

Amazon has made it clear that it is selling only "certain physical assets", and retains the ownership of intellectual property for AWS (Amazon Web Services) worldwide.

Both the Wall Street Journal and Reuters had reported that the China partner had notified investors that it was about to buy AWS's China business for 2 billion yuan ($301.2 million).

"In order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet", said AWS earlier today.

In a statement Amazon emphasised that it had not sold its business in China, saying that it "remains fully committed to ensuring Chinese customers continue to receive AWS's industry leading cloud services".

The spokesperson added that the company was excited about its business in China and its potential for growth. Moreover, the deal would help to "comply with China's laws to further improve the company's AWS cloud services" based on quality and security.

AWS has another hardware venture with the provincial government in Ningxia located in the northwest region of China.

Sinnet told its customers in August it would be shutting down its VPNs and other network services that allowed its users to circumvent the "Great Firewall System" of China that controls censorship, citing the government's direct instructions. Amazon's Chinese equivalent, Alibaba, leads the way having launched its own public cloud service in 2009 before expanding globally. The sale is meant to comply with government regulations and improve service, it said.

The move places a big shadow over foreign ventures of a similar nature in China.

Big name tech companies in the USA often bend over backward to either attempt to penetrate the highly protected Chinese market, or maintain a somewhat established presence.

China favors domestic firms over foreign ones with paternalistic policies.

On Monday, Amazon shares closed up 0.34% at $1,129.17.

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