A US federal judge has temporarily blocked a Pentagon rule that could cost companies their defence contracts if they share lobbyists with Alibaba, Reuters reported.
The California court granted Alibaba’s request for an injunction on Monday while its legal challenge continues.
The dispute began in June, when the Pentagon added Alibaba to a list of companies it says support China’s military.
The US has been tightening restrictions on Chinese technology more broadly. The Treasury Department has also introduced limits on US investment in Chinese AI and biotechnology.
Inclusion on the Pentagon list does not trigger formal sanctions, but it restricts the department’s ability to do business with the companies named. From 2027, the restrictions are also due to cover purchases of their products through third-party suppliers.
A separate US law bars Pentagon contractors from employing lobbyists who represent companies on the list. That meant firms sharing lobbyists with Alibaba risked losing defence work.
After Alibaba was added in June, the company dismissed dozens of its Washington lobbyists, Reuters reported, citing a source.
Monday’s ruling temporarily prevents the government from enforcing the lobbying restriction against Alibaba’s lobbyists. It does not remove Alibaba from the Pentagon’s list, a separate part of the company’s legal challenge.
Alibaba sued the US government in June, arguing that its inclusion on the list had “no basis in fact or law”. The company says it serves consumers, delivery businesses and corporate clients, and denies having ties to China’s military.
Neither Alibaba nor the Defense Department commented on the ruling, according to Reuters and Dow Jones.
The case is part of a wider legal challenge to the Pentagon’s list. Chinese drugmaker WuXi AppTec won a court order in August that kept it off the list.
In September, two subsidiaries of carmaker BYD sued over the lobbying restriction, arguing that it violates their free speech rights.
Drone maker DJI is also challenging its designation after an appeals court ordered the government to review the decision again.
The immediate financial impact on Alibaba is likely to be limited. The company has little business in the US, according to Morningstar, and remains focused primarily on its home market. Last month, it unveiled its own AI chip for use in its data centres.