China barred Tesla vehicles from entering certain government compounds in 2021 over security concerns regarding vehicle cameras, before lifting the restriction in 2024.

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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.

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Alibaba Group Holding Ltd. sued the Department of Defense

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Section 4663 restricts direct Pentagon contracts with listed entities and, beginning in 2027, bans purchases of their products or services through third-party contractors.

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.

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.

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.

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.

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.

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.

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 to its Section 1260H Chinese military company list in June 2026, following a brief notice posted and withdrawn in February 2026.

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 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.

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.

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.

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.

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.