Beijing Sinnet Technology Co Ltd, Amazon's China partner, said in a filing late on Monday that it would buy the USA firm's Amazon Web Services (AWS) public cloud computing unit in China for up to 2 billion yuan ($301.2 million).
It looks like Amazon is removing itself from the Chinese cloud services industry on account of stringent new data laws that went live in the country earlier this year. "We're excited about the significant business we have in China and its growth potential". Amazon confirmed that it will sell a certain physical property and it still owns the intellectual property for AWS worldwide.
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 the move was necessary for AWS to build up its other business areas in the market.
But Amazon said that it is only selling "certain physical assets" and still owns the intellectual property for AWS worldwide. AWS is significantly ahead of the competition across the world, but in China it must operate via local partners due to regulation.
On August Sinnet asked the customers to stop using virtual private networks (VPNs) that allow users to circumvent China's Great Firewall.
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Foreign firms in China have long complained about local restrictions that appeared to favour domestic players. In July, Apple dismissed VPN services from its app store in China.
Microsoft, Oracle and IBM did not immediately respond to request for comment on Tuesday.
In recent year, cloud services are becoming a crowded and major competitive domain in China.
However, like its peers, Amazon has found it hard making headway in China, which is dominated by local tech giants Alibaba and Tencent Holdings Ltd.