Alibaba has sued the US Defense Department after the Pentagon added it, along with Baidu and Tencent, to its Section 1260H list of "Chinese military companies" in June 2026, a designation that bars it from Pentagon procurement and raises the risk of further US sanctions. The company says the listing has "no basis in fact or law" and denies any role in China's "military-civil fusion" strategy, while the Pentagon cites Alibaba's censorship tools, joint ventures with state-owned firms and ties to Chinese regulators as evidence of alignment with the state. The case matters because it tests how far US authorities can treat China's private tech giants as extensions of the state amid the escalating US-China technology rivalry.