House Select Committee on China Chairman John Moolenaar has pressed Ted Leonsis, owner of the Washington Capitals and Washington Wizards, to cut ties with Alibaba after the Pentagon designated the Chinese tech giant as a “Chinese military company.”
The designation, issued under Section 1260H, bars the Defense Department from entering into, renewing, or extending contracts with Alibaba starting June 30. Moolenaar’s letter says Monumental’s continued commercial ties with Alibaba raise national security concerns.
Moolenaar said Alibaba’s cloud and artificial intelligence services support China’s BeiDou satellite navigation system, which the People’s Liberation Army (PLA) uses for positioning, navigation, and timing.
“BeiDou’s satellites will tell PLA systems and soldiers where they are and where to strike,” Moolenaar wrote. “Alibaba Cloud will help them do so.”
Monumental owns the Capitals, Wizards, Washington Mystics, and Capital One Arena. The letter does not allege that Monumental has violated U.S. law.
Representatives for Monumental Sports & Entertainment and Alibaba did not immediately respond to requests for comment.
Arena Partnership Draws Scrutiny
Moolenaar’s letter says Monumental has had an ongoing partnership with Alibaba, including sponsorship and payment-service ties.
The letter says Alibaba was the lead sponsor for a Washington Wizards event for the MSE Foundation, MSE’s official charity, as recently as April. It also says Monumental had previously described its agreement with Alibaba as a “groundbreaking sponsorship agreement” involving a technology platform sponsor.
A 2023 Monumental announcement naming Nisum as a technology development partner listed Alibaba among MSE partners, alongside Anheuser-Busch InBev, Capital One, and Giant Food.
Moolenaar’s letter also says Monumental had implemented Alipay throughout Capital One Arena.
The committee asked Monumental to provide copies of agreements with Alibaba Group Holding Ltd. or its affiliates, along with data showing the current relationship between Monumental and Alibaba, Alipay.com Co. Ltd., or related entities.
Pentagon Designation
The Defense Department on June 8 listed Alibaba Group Holding Ltd. as a Chinese military company under Section 1260H, a law requiring the department to identify companies it says are linked to China’s military or military-civil fusion system.
A Federal Register notice says the Defense Department determined that Alibaba is “indirectly affiliated” with China’s State-Owned Assets Supervision and Administration Commission, known as SASAC, and is a military-civil fusion contributor to China’s defense industrial base because of its affiliation with the Ministry of Industry and Information Technology.
The 1260H designation is not a general U.S. sanctions ban. The designation triggers defense-procurement restrictions and can carry wider reputational and commercial consequences for listed companies.
Alibaba Challenges the Listing
Alibaba sued the Defense Department in federal court on June 23, seeking removal from the list.
In its complaint, Alibaba said the Pentagon’s determination has “no basis in fact or law.” The company said it is publicly traded, has no relationship with SASAC, and has only ordinary regulatory contact with China’s Ministry of Industry and Information Technology.
“A regulator is not an affiliate,” Alibaba said in the complaint.
The company also said its products and services are built for retail, logistics, and enterprise information technology, not weapons, defense, or intelligence. It said its contracts and compliance controls prohibit military use.
The Defense Department’s designation remains in effect while Alibaba’s suit proceeds.
Monumental has not publicly said whether it will comply with the committee’s July 15 request.
