China announced its partnership with Alibaba will be put on a six-month hold, starting immediately. The sanction is a direct result of Alibaba choosing to contact the Apache Software Foundation as soon as it discovered the Log4j vulnerability, instead of breaking the news to the Ministry of Industry and Information Technology (MIIT) first.
“The company failed to effectively support the ministry’s efforts to manage cyber-security threats and vulnerabilities,” an unnamed source told China Daily.
The MIIT will reevaluate whether or not to resume Alibaba Group’s cloud storage and computing services once the sanction period is up, mid 2022.
The Chinese government’s commitment to digital protection can be traced back to 2017, when it approved its own Cybersecurity Law, though it came into effect until September 2021.
Immediately after the law came into effect, Beijing released several reporting platforms for corporate network vulnerabilities.
According to the South China Morning Post, the sites—or databases, really—give the government “real-time updates about any loopholes within the country’s mobile apps, connected cars, automation systems, and other general internet products that could be exploited by hackers or cybercriminals.”
A couple of months later, in November, the Chinese Personal Information Protection Law also became a reality. Experts anticipate Beijing’s regulatory crackdown to continue into the new year.
“Investors waiting for a regulatory ‘all clear’ for the internet sector will continue to be disappointed,” stated research group Gavekal Dragonomics.
Alibaba Is Feeling Under Pressure
2021 was a tough year for the Chinese tech giant Alibaba. With Beijing breathing down its neck, it struggled to keep investors’ trust in the company.
Alibaba recently lost its spot among the top 10 most valuable companies in the world, after reaching an all time high ($835 billion) in 2020. In fact, its share price plummeted down to $115.43 after the news of its fallout with the MIIT broke out. This is the lowest it’s been since 2017.
To make matters worse, rumor has it Beijing will soon forbid Chinese companies from listing in foreign markets. Meaning that Alibaba would have to remove itself from the New York Stock Exchange, losing investors in the process.
With the Log4Shell debacle looming over its head on top of everything else, projections aren’t too optimistic for the tech company.