Amazon to exit from cloud-computing business in China

Amazon

Beijing Sinnet Technology which runs Amazon’s cloud computing services in China has agreed to purchase the Jeff Bezos founded company’s Chinese web services business for up to 2 billion yuan ($301 million), ending the U.S. firms’s cloud-computing business in the country.

The purchase will comply with local laws and regulations and further improve service quality and security, Sinnet, the Amazon’s Chinese partner, said in a stock-exchange statement, reported Reuters.

In China, foreign cloud computing companies like Amazon and Microsoft are not allowed to sell their cloud services directly in China. Instead, they must partner with local Chinese companies and speak the country’s strict regulatory language to serve as their cloud vendors in the country, in compliance with the regulation that prohibits foreign companies from selling cloud services directly in China.

Sinnet, which began operating the Amazon services in August 2016, provides website hosting, Virtual Private Networks (VPNs) and other services which can be used to circumvent the Great Firewall of China.

In August Sinnet told customers it would begin shutting down VPNs and other services. The changes are linked to new national cyber laws that came into effect in 2017, which make network providers liable for content deemed dangerous or offensive to “socialist values”.

In 2013 Amazon’s web services business signed agreements with provincial governments in China, and has previously worked with some of China’s largest tech firms including Xiaomi Inc, Qihoo 360 Technology Co Ltd and Kingsoft Corp Ltd.

Cloud services have become a crowded and competitive field in China in recent years, with Alibaba Group Holding Ltd’s cloud unit opening over a dozen overseas data centres since 2016.

As Amazon Web Services expands abroad, the Asia-Pacific market especially India and China have emerged as promising markets. According to Bain & Company, China’s cloud computing market could be worth $20 billion by 2020.

AWS is coming under increasing competitive pressure because Microsoft, Alphabet’s Google, Oracle, and IBM have stepped up their campaigns for cloud computing market share.

The company talked about introducing its Alexa and Echo smart speaker products in the Indian market. Amazon plans to invest $5 billion to grow its Indian operations.

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