WASHINGTON, United States, June 24, 2026 (BSS/AFP) - Chinese tech giant Alibaba has filed a federal lawsuit against the US Defense Department for designating it a military-linked firm, with the company telling AFP on Wednesday that the labelling is "arbitrary and capricious".

The lawsuit, filed Tuesday in San Jose federal court, contests the Pentagon's decision to include Alibaba in a list released this month of companies it says have ties to the Chinese military.

"The determinations have no basis in fact or law," the complaint said.

"Alibaba is not a Chinese military company nor part of any military-civil fusion strategy," a company spokesperson told AFP on Wednesday.

"The decision to place Alibaba on the... list is arbitrary and capricious, and we are filing a lawsuit against the Department of War to demand removal from the list," they said.

The Pentagon released the new blacklist this month of 80 companies and their subsidiaries it said were aiding the Chinese military.

The list also saw tech giant Baidu and electric vehicle firm BYD added.

Under the designation, beginning June 30, the Pentagon cannot enter into new contracts with designated companies or their controlled subsidiaries.

The designation also restricts the company's ability to retain lobbying firms in the United States, which the lawsuit argues violates First Amendment rights.

"The effect is already being felt: advocates who have represented Alibaba for years have informed the company that they can no longer do so," the complaint stated.

Alibaba said in its lawsuit it is a publicly traded e-commerce and cloud-services provider with a diverse shareholder base dominated by major American financial institutions including JPMorgan, Citigroup, and BlackRock.

China retaliated against the blacklist on Monday, imposing export controls on 10 US companies involved in defense and rare earths mining.

The feud tests bilateral relations after US President Donald Trump and Chinese counterpart Xi Jinping met in Beijing last month to stabilize ties.