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Online retail giant Amazon.com Inc. confirmed on Tuesday that it is not pulling out its Amazon Web Services (AWS) from China, following its local partner, internet services provider Beijing Sinnet Technology co. Ltd.’s statement of purchasing its cloud-computing business.

The e-commerce company said that they did not sell its China-based AWS, but they did sold certain physical infrastructure assets to Sinnet, so as to conform to Chinese laws.

They also stated that they remain fully committed to ensuring Chinese customers will keep on receiving AWS’ industry leading cloud services, adding that AWS continues to own the intellectual property for AWS Services worldwide.

The company was excited as well on the significant business they have in China and its growth potential over the next several years.

Amazon to Sell AWS to Sinnet for $300 Million

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Earlier in the day, several reports has stated that Amazon is believed to be selling its Chinese web services business to Sinnet, triggering the idea that the company was putting an end to its cloud-computing operations in the country.

Sinnet stated in a filing late Monday that it would be purchasing the e-commerce’s business for as much as CN¥2 billion ($300 million), so as to help the unit follow local laws and regulations, as well as to further improve the service quality and security of Amazon Web Services (AWS).

Amazon was not reached immediately for a comment on the matter at that time.

Increasing Regulatory Assessment from the Chinese Government

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As Sinnet said, the deal is intended to help AWS comply with local terms and conditions, which could point to the increasing regulatory assessment from the Chinese government who is trying to further strengthen their control over the internet in the country.  

Amazon and Sinnet started working together in 2016, when the Seattle-based retail company chose the Chinese firm to operate and provide its AWS Cloud services in the country, as local regulations stated that foreign businesses can only offer their cloud-computing services through a local partner.   

The cloud-computing group has also controlled more than 40 percent of the global market for public cloud services during that year.

However, Amazon and other US tech companies have been put under pressure in China to meet the government’s need to further increase control over its already tight internet conditions.

The addition of new surveillance measures, along with a deeper assessment of cross-border data transfers are just some of the regulators’ means to apply its tighter rules on foreign data and cloud services in China.

Back in August, Sinnet has requested its local users to stop using tools, including virtual processing networks (VPNs) and any other software that enables them to bypass China’s internet censorship system the Great Firewall.

The changes were connected to the new national cyber rules that were enforced in 2017, which make network providers legally responsible for content considered risky or offensive to socialist values.  

A spokeswoman for Amazon at that time said that Sinnet is in charge of ensuring that its customers in the country will follow local laws and that their announcement was meant to remind its users of their responsibilities.  

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