The e-commerce and cloud giant called its designation "arbitrary and capricious" and says the label has already cost it business partners
Cheng Xin / Getty Images
Alibaba filed a federal lawsuit against the U.S. Department of Defense on Tuesday, seeking to be removed from the Pentagon's list of companies with alleged ties to China's military. Defense Secretary Pete Hegseth is named as a defendant in the action, which was brought in San Jose federal court in California, according to Reuters.
At the heart of the complaint is the claim that the Defense Department placed Alibaba on the so-called 1260H list without adequate justification, a move Alibaba characterizes as "arbitrary and capricious" with "no basis in fact or law." Alibaba also argues the designation violates constitutional due process and its First Amendment rights. "The determinations have no basis in fact or law," the complaint said.
The Pentagon said it does not comment on ongoing litigation.
According to Bloomberg, the company spent months trying to resolve the matter directly with the Defense Department — offering detailed evidence of its non-involvement with the PLA, responding to questions, and submitting a formal written reply — all without ever hearing back. Alibaba noted that news of its own blacklisting reached it only through publication in the Federal Register.
The Pentagon had accused Alibaba of being a "military-civil fusion contributor to the Chinese defense industrial base" through an affiliation with China's Ministry of Industry and Information Technology. Alibaba pushed back, arguing that its interactions with the ministry are a routine part of doing business in China and reflect nothing more than the standard relationship between a technology company and its national regulator. "A regulator is not an affiliate," the company said in its filing.
Among the practical consequences already felt: Lobbyists and advocates who had represented Alibaba for years have informed the company they can no longer do so. A provision of U.S. law that kicks in June 30 bars the Pentagon from entering into contracts with blacklisted firms; a separate restriction on purchasing their products or services through third parties follows in 2027. The designation also prevents the Pentagon from contracting with firms that lobby on behalf of listed companies.
Alibaba is not the first Chinese company to take this route. Legal challenges to the Pentagon blacklist have worked before: both Xiaomi Corp. and chipmaker Advanced Micro-Fabrication Equipment Inc. secured their removal from the list through litigation. WuXi AppTec, which was also added to the Pentagon's list this month, filed a similar lawsuit on June 11. Baidu and BYD, both designated at the same time as Alibaba, have also signaled they may pursue legal action.
When the Pentagon updated the 1260H list earlier this month, it grew to 188 total Chinese entities, a roster that now encompasses NIO $NIO, humanoid robot manufacturer Unitree, and memory chip producers ChangXin Memory Technologies and Yangtze Memory Technologies, among other additions. In a countermove, Beijing announced export controls targeting ten American companies with ties to defense and rare earth industries.
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