Alibaba Group Holding Ltd. NYSE:BABA, the Chinese e-commerce and cloud computing giant, received a temporary legal reprieve after a federal judge ordered the Pentagon not to treat the company as a Chinese military company under a new lobbying restriction while the court reviews Alibaba's challenge. The ruling gives Alibaba breathing room in a case that could test how far the U.S. can go in limiting the activities of Chinese companies accused of aiding China's military.
The restriction had pushed major Washington lobbying firms to cut ties with Alibaba and other Chinese tech giants because firms representing blacklisted entities could risk losing access to companies that contract with the Defense Department. Alibaba said all of its more than two dozen registered lobbyists withdrew in recent weeks, arguing the rule effectively caused it to lose its voice in federal policy discussions covering legislation, regulation and business-related issues.
Investors may see the ruling as a short-term easing of political pressure on Alibaba, though the broader legal fight remains unresolved. The case could draw close attention because the Pentagon's 1260H list has become a key tool in the U.S.-China rivalry, expanding to 188 designated Chinese military companies after Alibaba was added on June 8, with the roster spanning sectors including semiconductors, artificial intelligence, robotics and drones.