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Alibaba stock dips on news that U.S. is examining its cloud unit

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Yahoo Finance Live's Akiko Fujita discusses the Biden administration looking into Alibaba's cloud unit and what they are doing with data collection of U.S. customers.

Video Transcript

AKIKO FUJITA: Let's turn to one stock that is trending today. That is Alibaba-- shares there bouncing back from the lows that we saw in the session, down about half a percent here on the back of concerns that the US is now reviewing Alibaba's cloud unit for national security risks. "Reuters" reporting that this is all part of the scrutiny on Chinese tech companies.

The focus for the US government, though, is on how these companies store data of US clients, specifically their personal information, intellectual property, and then whether, in fact, Chinese government can gain access to it. Now, remember, if you think back to the previous administration, the Trump administration raised concerns about similar issues around data collection.

The Biden administration, though, according to "Reuters," launched a formal review of Alibaba's cloud unit a year ago once he took office. And, Brad, it's worth noting here-- the annual revenue in terms of the cloud business for Alibaba is not that significant. We're talking about less than $50 million.

Their US business or footprint is not that big. But you know, this is one of those markets, initially, they saw as a huge opportunity in terms of growth. And now that you've gotten the regulatory scrutiny on Chinese companies-- and by the way, the scrutiny back home as well-- there are concerns here that are now starting to rise again in terms of how this could all affect Alibaba's business. And that's why we're seeing some of the shares down today.

- Yeah, even with the six-month decline, down about 38%. I mean, they are still pretty close to their 52-week low in comparison to that 52-week high of $274. We'll see how investors continue to trade on this news for Alibaba.