Amazon sells Chinese cloud business assets in $300m deal

By:
Jason McGee-Abe
Published on:

Amazon has sold off hardware from its public cloud business in China to Beijing Sinnett Technology

Amazon signed an agreement in August 2016 to let the Chinese tech firm operate cloud technology and related services provided by Amazon Web Services (AWS) around the Beijing area in China, based on Sinnet’s own internet infrastructure around the capital.

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The sale, which has seen Sinnett put together up to 2 billion yuan (around $301.5m), comes amid tightening regulation over online data in the country whereby firms.

Sinnet said in a regulatory filing on Monday that the purchase, which is still pending, would help it "comply with China's laws to further improve the company's AWS cloud services" in terms of quality and security.

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Sinnet had asked its customers earlier this year to stop using virtual private networks (VPNs), which are able to circumvent China's Great Firewall, and said last year that Amazon AWS would enhance Sinnett’s cloud computing capacity and improve its hybrid cloud service.

“No, AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS’s industry leading cloud services.  Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services," an AWS spokesperson told Capacity.

"As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet, its longtime Chinese partner and AWS seller-of-record for its AWS China (Beijing) Region.  AWS continues to own the intellectual property for AWS Services worldwide. ‎We're excited about the significant business we have in China and its growth potential over the next number of years.”

The global cloud market has continued to see massive growth, with quarterly cloud infrastructure service revenues up 40% to $12 billion, according to Q3 2017 figures from Synergy Research. The company said that AWS was continuing to not only lead the market but also increase its share during the quarter. 

"While we forecast 40% growth in the total market for 2017, there’s still something a little shocking about seeing a business unit the size of AWS consistently growing its revenues by over 40%," said John Dinsdale, a chief analyst and research director at Synergy Research Group.

Amazon was recently in the news as a result of its partnership and deal with TE SubCom to build a new 60Tbps subsea cable, 14,000km long across the Pacific, with other Jupiter consortium members Facebook, NTT Communications, PCCW Global, PLDT and SoftBank. GTB