According to three sources on the topic, the Biden administration evaluates Alibaba's cloud business to assess if or not it constitutes a threat to US national security, as the government monitors Chinese technology giants' interactions with US corporations.
The investigation will allegedly concentrate on how the business holds data from its US customers, including personal information and intellectual property, and if the Chinese government may have access to it. One of the persons said that Beijing's ability to prevent US consumers from accessing their data stored on the Alibaba cloud is also a problem.
Regulators in the United States may eventually opt to compel the corporation to mitigate the dangers associated with the cloud business or restrict Americans at home and abroad from using the service entirely.
According to one of the three persons and a former Trump administration official, former President Donald Trump's Commerce Department expressed worry about Alibaba's cloud business. Still, the Biden administration initiated the formal study after taking office in January.
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An Overview of Alibaba Cloud Business
According to research company Gartner Inc, Alibaba's cloud business in the United States is modest, with yearly sales projected to be less than $50 million. However, if authorities finally decide to prohibit transactions between American companies and Alibaba Cloud, it would harm one of the company's most profitable businesses and jeopardize the company's image as a whole.
A spokesman for the Commerce Department said that the department does not comment on the "presence or absence of transaction reviews." A request for a response from the Chinese Embassy in Washington went unanswered.
Alibaba refused to make a statement. It did raise similar worries about operating in the United States in its most recent annual report, stating that US firms having contracts with Alibaba "may be barred from continuing to do business with us, including fulfilling their responsibilities under agreements involving our...cloud services."
The Need For An Investigation
The Commerce Department's Office of Intelligence and Security is leading the investigation into Alibaba's cloud business. The Trump administration established it to exercise sweeping new authority to prohibit or limit transactions between US corporations and internet, telecommunications, and technology companies from "foreign enemy" governments such as China, Russia, Cuba, Iran, North Korea, and Venezuela.
According to one of the individuals, the agency has been primarily focused on Chinese cloud providers amid increased worry about the possibility of data theft and access interruption by Beijing.
The Trump administration issued a warning against Chinese cloud providers, including Alibaba, in August 2020, "to prevent the most sensitive personal information of American citizens and the most valuable intellectual property of our businesses...from being stored and processed on cloud-based systems accessible to our foreign adversaries."
Cloud servers are also seen as a prime target for hackers to initiate cyberattacks due to their ability to mask the attack's origin and provide access to a diverse assortment of client networks.
While there are few public instances of the Chinese government pressuring a technology business to hand up sensitive customer data, indictments of Chinese hackers demonstrate their exploitation of cloud services to get private information.
Featured image: Alibaba
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