Alibaba Group Holding Ltd. sued the Department of Defense to be removed from a blacklist that identifies the e-commerce leader as a supporter of the Chinese military, appealing to the US justice system to avoid a designation the company says is arbitrary and unjustified.
The Hangzhou-based company argued in a lawsuit filed Tuesday that the Pentagon added Alibaba to a list of companies that allegedly aid the People’s Liberation Army without providing substantial evidence or explanation. The decision is a violation of constitutional due process and of the Chinese company’s right to free speech, it said in the filing in federal court in San Jose, California.
The lawsuit came after the Department of Defense earlier this month accused several of China’s biggest companies of aiding the PLA, including Alibaba, Baidu Inc. and BYD Co. Other Chinese companies included on the Pentagon’s so-called 1260H list are chipmakers ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co., as well as robotics developer Unitree Robotics — designated as Hangzhou Yushu Technology Co., Ltd.
Tencent Holdings Ltd., China’s leading games and social media company, had been added to the list last year.
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Alibaba said it has engaged with the Pentagon for months over the designation — at least since February when the Defense Department briefly posted a version of the blacklist before withdrawing it minutes later without explanation. The Chinese company said that it presented detailed evidence that it’s not a PLA supporter, answered questions and submitted a written response. Alibaba says the department never replied.
Right after Pentagon’s move this month, Alibaba said it is not a Chinese military company nor part of any military-civil fusion, and vowed to take legal action against attempts to misrepresent it.
While the list carries few immediate legal repercussions, the Pentagon is increasingly using it to restrict companies’ abilities to contract with the American military or to receive research funding. A 1260H designation also serves as a warning to US investors, and is widely considered a red flag that can precede more punitive trade restrictions.
Further, the National Defense Authorization Act for Fiscal Year 2025 prohibits the Defense Department from contracting with any entities that lobby or advocate for Chinese companies on the 1260H list, effective on June 30.
Alibaba said in the complaint that its inclusion in the 1260H list now prevents the company from retaining certain lobbyists that have represented the company for years, including lawyers and advocates it needs to challenge the military-supporter label.
It also argued that there is a lack of constitutional due process by the US government as it learned about its designation as a Chinese military supporter by reading the Federal Register.
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While Alibaba got its start as an e-commerce company — China’s answer to Amazon.com Inc. — it has since pivoted into artificial intelligence. Its Qwen models are among the leaders in the country, and have been widely deployed in companies and other organizations.
Alibaba is not the first company to have sued the Pentagon over the Chinese military company label. Chinese tech companies including Advanced Micro-Fabrication Equipment Inc. and Xiaomi Corp. successfully managed to rid themselves of the designation after suing the Department of Defense.
Like Alibaba, Baidu and BYD said earlier this month that they rejected the Pentagon’s assessment that they helped the Chinese military, hinting they too may take legal action. Baidu said it would “use all options available” to have the company removed from the list, while BYD vowed to safeguard its interests “through all feasible administrative and legal means.”
