Alibaba Group filed a lawsuit in a California federal court on Monday, seeking to overturn the US Department of Defence’s decision to place it on a blacklist of entities deemed to support China’s military. The designation, published on 8 June under Section 1260H of the National Defense Authorization Act, triggers a ban on new Pentagon contracts with the company and its controlled subsidiaries from 30 June, and prohibits the purchase of its goods or services through third parties from 2027. Alibaba’s complaint argues the determination is “arbitrary and capricious”, lacks due process, and violates First Amendment rights by forcing its long-time American lobbying firms to sever ties to protect their own defence contracts.

According to the Pentagon’s listing, Alibaba is a “military-civil fusion contributor to the Chinese defence industrial base” through its compliance with Chinese technology regulators and an indirect affiliation with the state asset supervisor. Alibaba counters that it is a publicly traded e-commerce and cloud-services provider, governed by an independent board with no military links, and that its platforms are built for retail, logistics and enterprise technology, not weapons or intelligence. The company notes that major US financial institutions, including JPMorgan, Citigroup and BlackRock, dominate its shareholder base, and that every multinational operating in China—American firms included—must follow the same local rules. A Pentagon spokesperson declined to comment, citing pending litigation.

Viewed from Washington, the expanded blacklist—which now covers 188 entities including search engine Baidu, electric vehicle makers BYD and NIO, and biotech firm WuXi AppTec—reflects a deepening concern that China’s private-sector technological advances are being harnessed for military modernisation. Beijing has responded sharply: on Monday, China’s Ministry of Commerce imposed export controls on 10 US companies involved in defence and rare earths mining, and barred government agencies from purchasing products from 46 American firms, among them Lockheed Martin and Raytheon. Chinese officials have stated that the US sanctions contradict the consensus reached by Presidents Trump and Xi during their meeting in Beijing last month, which was intended to stabilise bilateral relations.

The practical consequences for Alibaba extend beyond lost Pentagon business. The company says its American legal and lobbying advocates have already informed it they can no longer represent the firm, creating what the lawsuit describes as a functional blockade on its political voice in Washington at the moment it needs to defend itself. While the blacklist does not freeze assets or impose formal sanctions, the reputational damage is immediate: Alibaba argues that being branded a “Chinese military company” impugns its standing with every US commercial partner. WuXi AppTec filed a similar challenge on 11 June. The Alibaba case, now before a federal judge in San Jose, will test whether the Pentagon’s designation process meets constitutional standards of notice and a fair hearing, with the contract ban set to take effect at the end of the month.