On October 26, 2026, U.S. District Judge Eumi K. Lee issued a preliminary injunction preventing the Department of Defense from applying Section 4663 contracting restrictions to Alibaba Group Holding Ltd. Section 4663 bars Defense Department contracts with companies that share lobbyists with designated Chinese military entities. Judge Lee ruled the restriction likely violates Alibaba's First Amendment speech and petition rights, as the government failed to provide factual evidence linking shared lobbyists to national security risks.
Court preliminary injunction details
- ▪Judge Eumi K. Lee's ruling applies specifically to Alibaba Group Holding Ltd.'s lobbying restrictions without removing the firm from the military blacklist or invalidating the law universally.
- ▪The preliminary injunction allows Alibaba Group Holding Ltd. to retain U.S. lobbyists who also represent defense contractors while its underlying lawsuit against the Department of Defense proceeds.
- ▪U.S. District Judge Eumi K. Lee issued a preliminary injunction prohibiting the Department of Defense from enforcing contract restrictions tied to Chinese military blacklists against Alibaba Group Holding Ltd.
- ▪The preliminary order issued in the Northern District of California follows a temporary restraining order regarding Alibaba Group Holding Ltd. that was set to expire on October 26, 2026.
First Amendment constitutional ruling
- ▪The federal court subjected Section 4663 to strict constitutional scrutiny because lobbying government officials constitutes core political speech and exercise of the First Amendment right to petition.
- ▪Judge Eumi K. Lee ruled that Section 4663 acts as a speaker-based restriction on political speech that likely violates Alibaba Group Holding Ltd.'s First Amendment rights.
Government failure to prove security risks
- ▪Judge Eumi K. Lee found that the Department of Defense failed to present evidence demonstrating that lobbyists representing Chinese military companies pose specific national security risks.
- ▪The court determined that the U.S. government failed to show why less restrictive measures, such as mandatory lobbyist disclosure filings, would be insufficient to protect security interests.
- ▪The Department of Defense's sole legislative exhibit for Section 4663 commissioned a future study on consulting firms rather than establishing factual findings on risks posed by lobbyists.
Section 4663 contracting restrictions
- ▪The U.S. government defended Section 4663 as a national security measure to prevent designated foreign firms from obtaining sensitive military information or influencing Pentagon decisions through shared lobbyists.
- ▪Section 4663 of 10 U.S.C., effective June 30, 2026, prohibits the Department of Defense from contracting with companies that hire lobbying firms representing designated Chinese military companies.
- ▪Section 4663 restricts direct Pentagon contracts with listed entities and, beginning in 2027, bans purchases of their products or services through third-party contractors.
Impact on Alibaba lobbying operations
- ▪Alibaba Group Holding Ltd. argued in court filings that losing Washington lobbying representation left the firm sidelined during legislative deliberations affecting its commercial business operations.
- ▪Alibaba Group Holding Ltd.'s federal lobbying previously addressed issues including trade export expansion, technology regulation, artificial intelligence, device authorisations, and access to U.S. capital markets.
- ▪Following Section 4663's enactment, all registered lobbying firms ended their representation of Alibaba Group Holding Ltd. by June 30, 2026, to avoid losing defense contractor clients.
- ▪Prior to its military designation, Alibaba Group Holding Ltd. retained over two dozen lobbyists across multiple firms to represent its commercial interests before Congress and federal executive agencies.
DOD blacklisting and Alibaba lawsuit
- ▪The Department of Defense added Alibaba Group Holding Ltd. to its Section 1260H Chinese military company list in June 2026, following a brief notice posted and withdrawn in February 2026.
- ▪Alibaba Group Holding Ltd. sued the Department of Defense
- ▪The Department of Defense justified blacklisting Alibaba Group Holding Ltd. by citing alleged affiliations with China's State-owned Assets Supervision and Administration Commission and Ministry of Industry and Information Technology.
Broader blacklisting of Chinese tech firms
- ▪The June 2026 Section 1260H list update expanded across tech sectors to include companies such as Baidu, BYD, Nio, Unitree Robotics, and WuXi AppTec alongside Alibaba Group Holding Ltd.
- ▪Other blacklisted Chinese firms, including BYD, DJI, and WuXi AppTec Co., have launched separate legal actions challenging Department of Defense listing decisions and contracting bans.
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