FILE Picture (AP Photo/Mahesh Kumar A., file)Chinese technology giant Alibaba has filed a federal lawsuit against the US Defense Department (Pentagon) for designating the company as a military-linked firm. The lawsuit, filed Tuesday June 23, in San Jose federal court, contests the Pentagon's decision to include Alibaba in a list released earlier this month of companies with 'claimed' ties to the Chinese military. In its lawsuit, Alibaba says, "The determinations have no basis in fact or law." the complaint said.Alibaba Group has sued Pentagon to be removed from the blacklist. The Chinese e-commerce giant has appealed to the US justice system to avoid a designation the company says is arbitrary and unjustified. In its court filing, the Hangzhou-based company has argued that the Pentagon has linked the company to China's People’s Liberation Army (PLA) without providing substantial evidence or explanation. It terms the ban by Pentagon based on alleged ties to PLA a violation of constitutional due process and of the Chinese company’s right to free speech.Alibaba said in the complaint that its inclusion in the 1260H list now prevents the company from retaining certain lobbyists that have represented the company for years. This, the company said includes lawyers and advocates that it needs to challenge the military-supporter label. It further argued that there is a lack of constitutional due process by the US government as it learned about its designation as a Chinese military supporter by reading the Federal Register.While Alibaba is among China's biggest e-commerce companies, and is widely known as China’s answer to Amazon.com, it has in past few years increasingly pivoted into artificial intelligence. Alibaba's Qwen AI models are widely deployed in companies and other organizations in China.What is Pentagon's 'Ban list'Earlier this month, the US Department of Defense/War (the Department or the Pentagon) released an updated version of its list of "Chinese Military Companies" operating in the United States, pursuant to the requirements of Section 1260H of the National Defense Authorization Act (NDAA). Compared to the previous version of the list (published in January 2025), the updated list adds 65 entities in total, including 17 new parent-level listings and 48 new subsidiaries of previously listed parent companies. The Department also removed 10 previously listed entities upon determining that they do not operate directly or indirectly in the United States.The additions reach further across China’s economy than prior iterations of the 1260H List, it added Chinese technology companies Alibaba, Baidu, BYD, CALB, EVE Energy, NIO, JA Solar, Trina Solar, BOE, Tianma, Innolight, and drone and robotics companies Autel Technology, Unitree, Robosense. The 1260H List identifies entities that the Secretary of Defense has determined to be “Chinese Military Companies” that are “operating directly or indirectly in the United States.” The term “Chinese Military Company” is broadly defined to include any entity that is identified by the Secretary of Defense and is directly or indirectly owned by, controlled by, beneficially owned by, affiliated with or acting (in an official or unofficial capacity) as an agent or on behalf of specified Chinese military, security or certain other government bodies, or that has been identified as a “military-civil fusion” contributor to the Chinese defense industrial base, and that is engaged in providing commercial services, manufacturing, producing or exporting.The 1260H List initially is said to have initially served only as a “name and shame” tool, prompting the US companies to consider whether to cut ties with listed entities, even where commercial relationships with those entities remained legal. In this respect, the principal effect of designation was initially reputational rather than legal. However, through subsequent legislation, the 1260H List is said to have increasingly become a trigger for substantive restrictions affecting transactions involving designated entities. These restrictions include Pentagon procurement restrictions targeting 1260H entities, a secondary ban on Pentagon contracts with companies that engage lobbyists for 1260H-designated entities, and the use of federal funds for biotechnology equipment and services from 1260H entities.