Alibaba has taken the US Department of Defense to court over a label the company insists it does not deserve. In a complaint filed on Tuesday in the federal court in San Jose, California, the Hangzhou group asked a judge to strike its name from the Pentagon’s list of “Chinese military companies” and declared the designation, in its own words, to have “no basis in fact or law.”
The list in question is the one maintained under Section 1260H of the 2021 National Defense Authorization Act, which requires the Pentagon to name Chinese firms it judges to have direct or indirect ties to the People’s Liberation Army.
Alibaba was added on June 8, alongside Baidu, BYD, the robotics maker Unitree, and others, in an update that pushed the roster to 188 entities, up from 134 the year before.
In its filing, Alibaba argued that it is governed by an independent board, none of whom has any military affiliation, and that its products and services are built “for retail, logistics, and enterprise information technology, not weapons, defense, or intelligence.”
The 💜 of EU tech
The latest rumblings from the EU tech scene, a story from our wise ol’ founder Boris, and some questionable AI art. It’s free, every week, in your inbox. Sign up now!
The Pentagon’s justification, set out in a June statement, was that the company is “a military-civil fusion contributor to the Chinese defense industrial base” through its affiliation with China’s Ministry of Industry and Information Technology, with an indirect link to the state asset regulator known as SASAC.
The designation does not, by itself, ban anyone from doing business with Alibaba. What it does is layer on consequences.
Under the relevant law, the Defense Department cannot enter into or renew contracts directly with listed entities from June 30, and from 2027 it cannot buy their goods or services through third parties either.
Government contracts are prized by technology firms, and the company told the court that the listing creates barriers to financing, sourcing, and partnerships with American counterparties, reducing its access to capital and raising its risk profile. It also claimed the move violates its constitutional rights to due process and free speech.
Alibaba had signalled it would fight. When the June update appeared, a company spokesperson said it was “not a Chinese military company nor part of any military-civil fusion strategy” and promised to “take all available legal action.” China’s embassy in Washington called the designations “discriminatory.”
It is not the only listed firm to reach for a lawyer. WuXi AppTec, the biotech contract research group added in the same round, filed a similar suit on June 11.
Earlier rounds drew the same complaint without the litigation: when Tencent was added in January 2025, it called its inclusion “a mistake.” The Pentagon is not required to publish evidence. The criteria turn on military-civil fusion, broad enough to sweep in companies whose main business is consumer technology.
That breadth is part of why the list has become a recurring headache for the Chinese tech sector. It sits alongside export controls on chipmaking equipment, tariffs, and the Entity List run by the Commerce Department’s Bureau of Industry and Security, the same bureau now at the centre of a separate fight over access to advanced AI models.
For Alibaba, whose cloud division underpins much of China’s AI infrastructure and whose US footprint spans cloud, advertising, and research, the designation turns every American business relationship into a compliance calculation.
The timing did Beijing no favours. The June update landed during a fragile trade truce, and a day before Alibaba sued, China added 10 US firms to its own export control list. The two governments keep escalating in parallel while insisting they are talking.
What happens next is a matter for the court in San Jose, where Alibaba and WuXi will press their cases. The Defense Department has not commented.
The contracting bans take effect at the end of the month regardless, which means the practical clock and the legal one are running at different speeds. Alibaba is asking a judge to stop both.
