Alibaba Sues US Government to Remove it from Pentagon Blacklist

E-commerce giant Alibaba has launched a high-stakes legal challenge against the US government, suing to get off a Pentagon blacklist that claims it is linked to the Chinese military.

The US Department of Defense (DoD) has said that because Alibaba complies with Chinese technology regulators, it is effectively an arm of the military.

In the lawsuit filed in a California federal court Alibaba pushed back, claiming the determinations "have no basis in fact or law".

The challenge comes after the Pentagon recently expanded its blacklist of companies it will not be able to do business with from the end of the month to include massive tech names like Baidu, BYD, and Nio.

The defence department put Alibaba on the so-called 1260H list, saying the firm was a "military-civil fusion contributor to the Chinese defence industrial base" because of its regulatory ties to Beijing.

But Alibaba countered the argument, saying none of the members of its independent board had any military affiliation.

Every multinational operating in China - including American firms - must follow the exact same local rules, it noted.

Its platforms, Alibaba said, are built for retail and cloud computing, not weapons or intelligence.

"Alibaba is not a Chinese military company nor part of any military-civil fusion strategy," the company told the BBC.

"The decision to place Alibaba on the 1260H list is arbitrary and capricious, and we are filing a lawsuit against the Department of War to demand removal from the list," it added.

While the blacklist does not freeze finances immediately, it triggers a brutal operational penalty on 30 June.

Starting next week, the Pentagon is legally banned from doing business with any blacklisted firm.

Crucially, the law also extends to any US contractor that shares a lobbyist or law firm with a blacklisted entity. In Alibaba's case, the company argues that this restriction creates a functional blockade, forcing its long-term American advisers to sever ties to protect their own lucrative defence contracts.

The rule effectively strips the company of its political and legal voice in Washington at the exact moment it needs to defend itself.

According to the complaint, Alibaba had previously asked to meet with the agency to address the Chinese military affiliation concerns, which included presenting evidence of its US economic contributions.

However, the tech giant says that even after its submissions, the agency did not raise any concerns with the firm nor did it request additional information. Rather, it "designated Alibaba without notice or a fair hearing", the compliant notes.

The DoD declined to comment on the matter, telling the BBC, "We do not comment on ongoing litigation".