Judge grants Alibaba reprieve from US military lobbying ban

A federal judge has ordered the Pentagon to give Alibaba a temporary reprieve from new lobbying restrictions tied to its placement on the US list of Chinese military companies.

Judge halts enforcement of the lobbying rule for Alibaba. US District Judge Eumi K. Lee ruled on July 5 that the Pentagon must not treat Alibaba as a Chinese military company with respect to the lobbying restrictions until she resolves the company's motion or 60 days after a court hearing, whichever comes first. The order, issued in San Jose federal court, stems from Alibaba's lawsuit claiming the designation lacks basis in fact or law and violates its constitutional rights to speech and due process.

The decision tests the US government's ability to curtail Chinese companies through the expanded restrictions.

1260H list triggers new DoD contracting limits. Alibaba was added to the Pentagon's 1260H entity list on June 8, bringing the total to 188 companies that span semiconductors, AI, robotics and drones. The list is distinct from the OFAC sanctions list that bars companies like DJI from doing business in the US. A recent legislative change now prevents the Department of Defense from entering contracts with any company that engages lobbyists or lobbying firms representing 1260H-listed entities.

Alibaba argues the rule silences its federal advocacy. The company stated that the restriction caused all of its more than two dozen registered lobbyists to withdraw their registrations. It argued this prevents it from hiring representation to challenge the government, thereby violating its right to free speech and causing it to lose its voice across dealings with the federal government on legislation, regulation and policies that shape its business. Alibaba maintains it does not work with the Chinese military and should be removed from the list.

Pentagon agrees to limited pause while defending the rule. The Pentagon recognized that entering a stipulation for a limited period would benefit both parties and the court as it assesses the complaint, even while arguing the lobbying restriction is constitutional. At the same time, members of the US House Select Committee on China recently urged Defense Secretary Pete Hegseth to carry out strict implementation of the lobbyist ban. Representatives John Moolenaar and Elise Stefanik wrote that it is critical for the Department's contractors to avoid partnering with firms and lobbyists that advance the interests of companies executing the military ambitions of the Chinese Communist Party.

Outcome could shape treatment of other listed firms. Judge Lee's decision could affect current and future companies placed on the 1260H list. The case continues as the court evaluates Alibaba's motion for broader relief.