Amazon.com, Inc. (NASDAQ: AMZN) has announced plans to sell their public cloud business hardware in China following a tight regulation over online data that is creating obstacles for technology firms operating in that country. Amazon’s Web Services (AWS) public cloud computing unit is to be sold to Beijing Sinnet Technology Co Ltd. for about $301.2 million.
Foreign data and cloud services rules are being tightened by regulators and are implementing new surveillance measures and increasing inspections of cross border data transfers. A law was enforced this past June to require companies to store data locally and would required AWS to build up the other business areas in the market.
Sinnet announced in August that they would shut down VPNs and other services on their networks that allow users to bypass China’s firewall system of censorship. Following this, other big corporations such as Microsoft, IBM, and Oracle are facing tough new regulatory challenges in localizing their data storage units. Firms like Apple have already transferred tata to Chinese ventures overseen by local authorities.
Chinese companies account for about 80% of total cloud services revenue in China since those systems have become a competitive field in recent years. Companies like Alibaba Group Holding Ltd’s cloud unit opened over a dozen overseas data centers since last year.
“We expect other foreign players, such as Oracle and IBM, will also ensure regulatory compliance as long as they want to provide public cloud services in China,” said Charlie Dai, Beijing-based analyst at Forrester Research.