Foreign cloud providers seeking to operate in China have to apply for a license from the authorities before they’re allowed to do so. This involves partnering with a designated local provider which is responsible for reselling the service.
Since August 2016, Amazon Web Services (AWS) has been operated in China by Beijing Sinnet Technology. Today, Amazon announced it’s selling the entire service to Sinnet for 2 billion yuan (around $301 million).
Amazon said the decision will help AWS “comply with local laws and regulations and further improve service quality and security,” Business Insider reports. It leaves Amazon without its own public cloud presence in China. Although the company will retain its intellectual property, all the server infrastructure is now in the hands of Sinnet.
Amazon is the biggest public cloud provider globally. Its decision to exit the Chinese market demonstrates the complexities of the operating environment imposed by the government. Some Western companies have agreed to meet China’s stipulations but many others are still waiting for a chance to launch their business. China’s effectively forcing foreign tech firms to provide backdoors into their software or leave the country altogether.
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Under national cybersecurity laws introduced this year, China now forces social networks to censor user content according to the requirements of the government. This is supposed to filter out posts that may threaten “socialist values.” For most foreign firms, this is a pill too hard to swallow.
The exit of Amazon Web Services leaves multinational cloud consumers with fewer options for their Chinese operations. Although the cloud is supposed to extend beyond borders, the realities of different governments and cultures worldwide are preventing true Internet democratisation. Foreign firms with Chinese businesses may now need to choose a new partner to host their services.
Amazon Web Services debuted in China in 2013 when Amazon acquired the necessary licenses from China’s provincial governments. Before partnering with Sinnet, the service was operated by Chinese tech firms including Xiaomi, Qihoo 360 and Kingsoft. Foreign providers continue to have a minor presence inside China as cloud sales are dominated by local firms such as Tencent and Weibo.
