Could Alibaba Be The Next Company To Be Banned By The US Government?

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In recent times, the US government has targeted series of Chinese companies with some sort of ban and restrictions.

Few weeks ago, the United States government issued a ban restricting any transactions with TikTok and its parent company, ByteDance.

Also, the ban was extended to Tencent, owner of WeChat – the Chinese app that works like WhatsApp.

The restriction on WeChat came few hours after the executive order banning TikTok came on the 14th of August.

Indian times reports that earlier this month, US Secretary of State Michael Pompeo said that the Trump administration is “working hard” to protect Americans from the threats of “untrusted vendors” such as TikTok and WeChat, which it wants to remove from US app stores like those operated by Apple and Google.

The US and China have been at loggerheads for a while on issues surrounding trade, tech, security laws and perhaps, other issues.

The push from Washington is also against China’s sudden but determined rise in tech prowess, economy, and global relevance.

We are in a paradigm shift, and geopolitics is going through a historic transformation right now,” Alex Capri said.

Accusations have been flying around about Chinese tech companies, from the house of assembly and the executive arm of government.

Although, Alibaba has not been raising heads and drawing attention of the US government, the pounce on Chinese tech might be extended to the company as well.

Alibaba has not had a lot of expansion into the West, and has not threatened any American brand yet.

The US president, Donald Trump has also not spoken ill of the company yet, neither has he mentioned the company in relations to the current wave of sanctions targeted at Chinese tech firms.

CNN reported that the company is on the minds of US officials. Secretary of State Mike Pompeo name-checked Alibaba last week when he urged American companies to remove “untrusted” Chinese-owned technology from their digital networks.

The US government wants to protect “Americans’ most sensitive personal information and our businesses’ most valuable intellectual property — including Covid vaccine research — from being accessed on cloud-based systems run by companies,” Pompeo said, making reference to Alibaba, Tencent.

Alex Capri said Alibaba was “nurtured in a fully protected environment in China, that was closed to foreign competitors, they captured market share without having to compete with foreign companies.”

Although, a US sanction will barely affect Alibaba’s e-commerce and financial business.

80% of the company’s revenue comes from Asia, while the remaining percentage is spread across the world.

Alibaba’s cloud business, which is used in the US is unlikely to affect the company, as it accounts only for about 10% of the company’s revenue.

Even though Alibaba generates little revenue from the United States, the country is still an important market.

CNN reports that last year, the company opened up its e-commerce business to small US businesses and launched an English language version of its Tmall platform.

The platform have players like Apple, Nike, and Johnson and Johnson trading on them.

The company also listed on the New York stock exchange when it went public in 2014. The offering made the company about $25 billion, making it second only to Saudi Arabia’s oil company, Aramco.

The crackdown on Chinese apps might also come back to harm American apps.

If the US government force brands like Apple to remove Chinese apps from their app store, it would make Apple devices less attractive in China.

Many people rely on WeChat, for example, to communicate with people, make payments, hail cabs, etc.

This might affect Apple’s sale. Last year alone, Apple made $44 billion from China, which is about 17% of the company’s sale.

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