Amazon’s AWS business is reportedly pulling out of China

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.

The U.S. company has agreed to sell its China-based web services business to Beijing Sinnet, the local partner that operates it, according to a filing on the Shenzhen Stock Exchange that was noted by The Wall Street Journal and Reuters. The deal will be reportedly be worth up to 2 billion yuan, or $300 million.

TechCrunch contacted Amazon for comment but did no hear back at the time of writing. We’ll update this article with any updates from Amazon.

Amazon launched its web services business — better known as AWS — in China in 2014.  AWS is significantly ahead of the competition across the world, but in China it must operate via local partners due to regulation. The company signed a deal with Sinnet back in September 2016.

The AWS China business had worked with governments in Beijing and Ningxia, and companies that include consumer names like Xiaomi, security firm Qihoo and software maker Kingsoft.

Legal reasons appear to be the reason that Amazon is offloading the business. Sinnet said in the filing that the deal will help the service “comply with local laws and regulations and further improve service quality and security.”

That’s almost certainly a reference to new regulations around data that went live in June and give China’s central government more direct control over the operations of internet-based companies in the country.

This isn’t the first time Chinese laws has impacted AWS.

Back in the summer, Sinnet had contacted customers to warn them not to operate VPN software in response to a government crackdown on services that enable China-based individuals to gain unfettered access to the internet. Apple was among other Western companies to respond similarly to the government’s demands. The iPhone-maker banished VPN services from its App Store in what was one of the largest blows to internet freedom in the country in the modern era.