Chinese e-commerce giant Alibaba is reportedly being investigated by the Biden administration to determine whether it poses a risk to US national security.
According to Reuters, which says it’s been briefed by three sources with knowledge of the matter, the focus of the probe is on how the company stores U.S. clients’ data, including personal information and intellectual property, and whether the Chinese government could gain access to it.
The potential for Beijing to disrupt access by U.S. users to their information stored on Alibaba cloud is also said to be a concern.
“U.S. regulators could ultimately choose to force the company to take measures to reduce the risks posed by the cloud business or prohibit Americans at home and abroad from using the service altogether,” the report said.
Former President Donald Trump’s Commerce Department was concerned about Alibaba’s cloud business, but the Biden administration launched the formal review after he took office in January, according to one of the three sources who have briefed Reuters.
Alibaba’s U.S. cloud business is small, with annual revenue of less than an estimated $50 million, according to research firm Gartner Inc. But if regulators ultimately decide to block transactions between American firms and Alibaba Cloud, it would damage the bottom line one of the company’s most promising businesses and deal a blow to reputation of the company as a whole.
Alibaba has declined to comment.