Alibaba is suing the Pentagon to have its name removed from the list of Chinese military companies.

      Alibaba has filed a lawsuit against the US Department of Defense regarding a label that the company believes it should not have. In a complaint submitted on Tuesday to the federal court in San Jose, California, the Hangzhou-based firm requested that a judge remove its name from the Pentagon’s list of “Chinese military companies,” asserting that the classification has “no basis in fact or law.”

      This list is maintained under Section 1260H of the 2021 National Defense Authorization Act, which mandates that the Pentagon identify Chinese companies it perceives to have direct or indirect connections to the People’s Liberation Army.

      Alibaba was included in the list on June 8, alongside companies like Baidu, BYD, the robotics firm Unitree, among others, expanding the total to 188 entities from 134 the previous year.

      In its legal filing, Alibaba contended that it is overseen by an independent board, none of whose members have military backgrounds, and emphasized that its products and services are designed “for retail, logistics, and enterprise information technology, not for weapons, defense, or intelligence.”

      The Pentagon justified the designation in a statement from June, claiming the company is a “military-civil fusion contributor to the Chinese defense industrial base” due to its ties with China’s Ministry of Industry and Information Technology, which is indirectly linked to the state asset regulator SASAC.

      While the designation does not outright prohibit business dealings with Alibaba, it does impose significant consequences.

      According to the relevant law, the Defense Department cannot enter into or renew contracts with listed entities starting June 30, and from 2027, it will also be unable to acquire their products or services through third parties.

      Technology firms highly value government contracts, and Alibaba informed the court that the listing creates obstacles to financing, sourcing, and partnerships with American companies, thereby limiting its access to capital and increasing its risk profile. The firm also argued that this action infringes on its constitutional rights to due process and free speech.

      Alibaba had indicated its intention to contest the designation. Following the June update, a spokesperson stated that it is “not a Chinese military company nor part of any military-civil fusion strategy” and pledged to pursue “all available legal action.” The Chinese embassy in Washington described the labels as “discriminatory.”

      Alibaba is not the only company on the list that has sought legal recourse. WuXi AppTec, a biotech contract research organization included in the same update, filed a similar lawsuit on June 11.

      Previous updates prompted similar complaints without resorting to litigation; when Tencent was added in January 2025, the company labeled its inclusion “a mistake.” The Pentagon is not obligated to provide evidence for its determinations. The criteria regarding military-civil fusion are broad, allowing for the inclusion of companies primarily focused on consumer technology.

      This extensive scope is a significant reason why the list has become a persistent challenge for the Chinese tech sector. It exists alongside export restrictions on chipmaking equipment, tariffs, and the Entity List managed by the Commerce Department’s Bureau of Industry and Security, which is also currently involved in another dispute over access to advanced AI models.

      For Alibaba, whose cloud division supports a large portion of China’s AI infrastructure and whose business in the US encompasses cloud services, advertising, and research, this designation complicates every American business relationship with compliance considerations.

      The timing was not favorable for Beijing. The June update coincided with a delicate trade truce, and the day before Alibaba filed its lawsuit, China added 10 US companies to its own export control list. Both governments continue to escalate tensions while asserting that dialogue is ongoing.

      The next steps rest with the court in San Jose, where Alibaba and WuXi will advocate for their cases. The Defense Department has not made any comments on the matter.

      The contracting bans are set to take effect at the end of the month regardless, meaning that the practical timeline differs from the legal one. Alibaba is requesting a judge to halt both proceedings.