Alibaba Files a Lawsuit Against the U.S. Department of Defense: Demands Removal of the “Chinese Military Company” Blacklist, Baidu or BYD, or Follow-Up Actions

Alibaba files a lawsuit in the U.S. federal court, seeking to overturn its designation on the 1260H military enterprise list, accusing the Pentagon of “failing to provide substantive evidence,” alleging that the program violates constitutional due process, and stressing that the company has never supported the Chinese People’s Liberation Army (PLA).
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Table of Contents

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• What is the 1260H list? What does being listed mean in terms of the cost?
• Alibaba’s core defense: procedural unconstitutionality, not about the entity itself
• Xiaomi previously sued successfully; developments at Baidu and BYD draw attention

Alibaba formally takes on the U.S. government. According to Bloomberg, on Tuesday (June 23), Alibaba Group filed a lawsuit in the U.S. District Court for the Northern District of California’s San Jose division against the U.S. Department of Defense, seeking to overturn the decision that it be listed on the so-called “1260H list,” which marks Alibaba as a company allegedly supporting the Chinese People’s Liberation Army (PLA).

In its complaint, Alibaba states that the Pentagon added it to the list without providing “substantive evidence or explanation,” an action that violates the due process protections guaranteed by the U.S. Constitution while also infringing on the company’s freedom of speech rights.

Bloomberg, citing the complaint, indicates that Alibaba has been in communications with the Department of Defense since this February. At that time, the Pentagon had briefly made public a version of the blacklist, only to remove it again within minutes without apparent reason. The company emphasized that it had submitted detailed rebuttal evidence, responded to questions, and submitted written statements, but the Department of Defense never replied.

What is the 1260H list? What does being listed mean in terms of the cost?

The 1260H list is named after Section 1260H of the 2021 National Defense Authorization Act. The Department of Defense updates it annually, targeting companies that have been designated as “suspected of assisting the Chinese military.”

According to the latest information compiled by Bloomberg, the updated list released on June 8, 2026 includes 188 Chinese companies, up sharply from 134 the previous year—its largest expansion in nearly five years. Major companies newly added in this round include: Alibaba, Baidu, BYD (BYD), Changxin Memory Storage (CXMT), Yangtze Memory Technologies (YMTC), and robot manufacturer Unitree Robotics. Tencent was added as early as last year.

The direct consequences of being listed are accelerating the tightening. Starting June 30, 2026, the U.S. Department of Defense will prohibit directly signing contracts with companies on the list; starting in June 2027, it will further prohibit indirect procurement through third parties. In addition, under the FY2025 National Defense Authorization Act, effective June 30, organizations that lobby on behalf of companies on the 1260H list are also barred from handling Department of Defense contracts. Bloomberg points out that this is precisely what is affecting Alibaba. In its complaint, the company states plainly that the designation has made it unable to continue engaging lobbyists, lawyers, and advocacy figures it had previously appointed for years to handle related business.

Although the list does not yet carry immediate legal sanctions, Bloomberg emphasizes that the Pentagon is using it increasingly to restrict companies’ eligibility for military procurement and research funding, and that it is widely viewed as a “red-flag warning” signaling even stricter trade sanctions—sending a clear alert to U.S. investors.

Alibaba’s core defense: procedural unconstitutionality, not about the entity itself

Alibaba chose to challenge the matter from the procedural perspective rather than merely denying the facts. The complaint states that the company learned it had been designated as a “Chinese military company” only by reading the Federal Register—meaning the government never formally notified the parties involved and never provided a meaningful opportunity to mount a substantive defense. Alibaba argues that this process fundamentally fails to meet the minimum requirements of due process under the U.S. Constitution.

Of note is that Alibaba is no longer just an e-commerce company. As Bloomberg points out, in recent years the company has carried out a major pivot toward artificial intelligence. Its self-developed large language model series, Qwen, ranks among the top in the Chinese market and has been widely deployed across enterprises and institutions. Against this backdrop, what the Department of Defense views as the alleged “military-civil fusion” could be even harder to dismiss.

Xiaomi previously sued successfully; developments at Baidu and BYD draw attention

Alibaba is not the first company to pursue legal action. Bloomberg’s case roundup shows that Chinese technology companies including Advanced Manufacturing Equipment (AMEC) and Xiaomi have previously sued the U.S. Department of Defense and successfully removed themselves from the 1260H list, providing precedents for law-based challenges. WuXi AppTec also filed a lawsuit ahead of time on June 11 to 12.

Developments at Baidu and BYD are also worth watching. In early June, both companies issued statements denying assistance to the Chinese military. Their wording hinted that they may follow up with legal action. Baidu said it would “use all available options” to seek removal, while BYD declared it would “defend its rights through all feasible administrative and legal means.” If multiple companies bring lawsuits at the same time, it will pose an even greater challenge to the Department of Defense’s listing mechanism.