Amazon surrenders cheapest bit of Chinese cloud

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China's internet safety laws, which entered into force in June, require domestically gathered customer data that is stored locally or removed from the country to be screened by authorities.

Commenting on its decision to sell the entire business, Amazon said, "No, AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS's industry leading cloud services".

Sinnet Technology Beijing, which is the Chinese partner of Amazon, said in a Monday filing that it would purchase the US company's Amazon Web Services public cloud computing business in China at a price of as much as 2 billion yuan or $301.3 million.

The deal could be linked to increasing regulatory scrutiny from the Chinese government who is trying to tighten their grip on the internet in the country. He added this move was necessary for AWS to increase its other areas of business within the market. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters.

The 2 billion yuan (US$301.2 million) transaction was arranged in order to comply with national security laws that prevent non-Chinese companies from owning certain critical infrastructure assets, including those involved with the delivery of cloud services.

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Earlier this year Apple transferred data to China-based companies.

Sinnet and Amazon signed an operation agreement in July 2016, in which Amazon authorized Sinnet to operate Amazon cloud services in the Beijing region.

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

Whereas the European Union sees foreign cloud services as a source of revenue - fining them billions whenever they can think up some legal infraction they may have committed - China is obliging foreign cloud service providers to sell their assets to China-based companies which come under state control. Microsoft has its Azure cloud services operating in partnership with 21Vianet Group, which is based in China.