Amazon will be selling part of its cloud services in China to its technology partner in that country, Beijing Sinnet Technology. In a regulatory filing in China, Sinnet said it is buying the stake for $301 million (2 billion Chinese yuan) in order to help it comply with the country’s laws and enhance the value and security features of the company’s AWS cloud services.
The Chinese firm has been operating Amazon’s cloud business in the Asian nation under a deal that was signed in August 2016.
Amazon however, clarified in a statement that it wasn’t quitting China, the world’s second-largest economy, but was simply selling certain physical infrastructure assets to Sinnet to comply with Chinese law which prohibits non-Chinese firms from owning or deploying select technology in cloud services. The e-commerce giant added that it will retain the intellectual property for AWS globally and will continue providing its cutting edge AWS services to Chinese customers, noting that the market is exhibiting massive growth potential in the years ahead. AWS remains a core revenue generator for Amazon and is largely responsible for the more than 50 percent growth in the company’s share price in the past one year.
The Chinese market has been challenging for technology firms from the West. The Chinese government has tightened its noose on access to information and technology it deems a threat to national security. Using the Great Firewall, the government restricts access to certain content across the web which has led many Chinese internet users to use virtual private networks (VPNs) to evade the controls. The VPNs help users to circumvent such government censorship and geo-restrictions, allowing them access to content by connecting to proxy servers which protects their location and identity.
Back in July, Apple got rid of VPNs in its Chinese app store in a bid to appease the government. Early this year Sinnet told its customers to cease the use of virtual private networks.