EXCLUSIVE-Investigation: from the United States on the “cloud” division of Alibaba-sources

by Alexandra Alper

WASHINGTON, Jan 18 (Reuters) – The U.S. administration has opened an investigation into the cloud computing division of Chinese e-commerce giant Alibaba to determine whether it poses a national security risk to the United States. United, according to three sources familiar with the proceedings.

The investigation focuses on how the company stores US customer data, including personal information and intellectual property, and whether the Chinese government has access to it, the sources said.

The possibility of Beijing disrupting US users’ access to their information stored on Alibaba’s cloud is also a risk, one of the sources said.

US regulators could choose to compel the company to take steps to reduce those risks or bar Americans at home and abroad from using the service.

Alibaba’s cloud business in the United States is small, with annual revenue below $50 million, according to research firm Gartner. But if regulators ultimately decide to block transactions between US companies and Alibaba Cloud, it will damage one of the group’s most promising businesses and undermine the company’s reputation as a whole.

Alibaba declined to comment. In its latest annual report, the company raised concerns about its U.S. operations, saying U.S. companies that have contracts with Alibaba “may be prohibited from continuing to do business with us, including from perform their obligations under agreements involving our… cloud services”.

The investigation of Alibaba’s cloud activity is conducted by a small office within the Department of Commerce, called the Office of Intelligence and Security.

This unit was created by the Trump administration, which gave it sweeping powers to prohibit or restrict transactions between American companies and internet, telecommunications and technology companies from “adversarial foreign” countries such as China. , Russia, Cuba, Iran, North Korea and Venezuela.

The Trump administration had issued a warning in August 2020 against Chinese cloud providers, including Alibaba, “to prevent the most sensitive personal information of American citizens and the most valuable intellectual property of our companies.. stored and processed on cloud systems accessible to our foreign adversaries”. (Report Alexandra Alper with Karen Freifeld, Chris Bing and Echo Wang; French version Federica Mileo, editing by Sophie Louet)

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