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Investing.com – Alibaba (NYSE:BABA) shares traded off in early market action on Wednesday after news of the company being suspended from an information sharing partnership with the central China government.
Per Reuters, Alibaba failed to report a vulnerability to the Apache logging framework. This led to the Ministry of Industry and Information Technology (MIIT) suspending a partnership with Alibaba’s cloud unit for six months, pending whether Alibaba can address the issue internally.
Alibaba’s cloud unit accounted for 10% of their most recent quarter’s revenue, and grew at 33% year over year, making it one of their top growth engines. The setback for the unit comes at the end of a long year for Alibaba, which has seen its shares drop 50% for the year and nearly 60% from 52-week highs. Regulatory scrutiny, concern over founder Jack Ma’s well being, and disappointing results have all weighed on shares.
This news may also be weighing on the sector more broadly; the KraneShares CSI China Internet ETF (NYSE:KWEB) is down nearly 2% today while the NASDAQ Golden Dragon China is down over 1%.
