China hits back at the US as Alibaba blocks Anthropic’s Claude code due to…, here’s what exactly happened

The technology rivalry between the United States and China has taken another sharp turn after Chinese tech giant Alibaba decided to ban the use of Anthropic’s Claude Code within its organisation. The move comes amid allegations that the AI coding tool poses serious security risks and could expose sensitive corporate information. The decision is also being viewed as the latest development in the growing dispute between the two countries’ artificial intelligence companies.

Alibaba Bans Claude Code After Internal Security Review

Alibaba has announced that from July 10, 2026, employees will no longer be allowed to use Anthropic’s Claude Code for work-related tasks. According to reports cited by Chinese media, the company carried out an internal security review before taking the decision.

The review reportedly classified Claude Code as a high-risk software application. Alibaba believes the tool may contain a potential “backdoor,” which could allow unauthorized access to company systems. A backdoor is a hidden method that can enable software developers or cybercriminals to access devices or networks without the user’s knowledge, potentially exposing confidential information.

Following the decision, Alibaba has reportedly added Claude Code to its list of restricted software and advised employees to use its alternative AI coding platform, Qoder.

Spyware And Data Theft Allegations Raise Security Concerns

According to reports, Alibaba has accused Anthropic of embedding a mechanism inside Claude Code that could create security vulnerabilities. The company fears that sensitive information, including customer data, passwords and confidential business documents, could be exposed if the software is used inside its corporate network.

The controversy reportedly began after a Reddit user claimed to have reverse-engineered Claude Code and alleged that the software contained embedded spyware-like functionality. The claims quickly triggered discussions about data privacy and AI security across the technology industry.

However, Anthropic has not released an official statement addressing the allegations. A member of the Claude Code development team reportedly explained that the disputed mechanism was designed to prevent account reselling and AI model distillation rather than to collect user data. The developer also reportedly said the feature would be removed in an upcoming software update.

Decision Comes After Earlier Dispute Between Alibaba And Anthropic

Alibaba’s latest action follows accusations made by Anthropic in June 2026. At that time, the US-based AI company alleged that Alibaba’s Qwen Lab had created nearly 25,000 fake accounts and made millions of attempts to improperly access its systems, allegedly to obtain proprietary code and data.

Alibaba’s decision to block Claude Code is widely being interpreted as a response to those earlier allegations. While neither side has publicly resolved the dispute, the exchange of accusations has highlighted growing competition between leading AI developers in both countries.

What The Ban Means For The AI Industry

The latest dispute reflects increasing concerns over cybersecurity, intellectual property protection and trust in AI software. As companies rely more heavily on artificial intelligence for coding and business operations, security reviews of third-party AI tools are becoming more common.

Industry experts believe such disputes could encourage more organisations to adopt domestically developed AI platforms instead of relying on foreign software. The development also underscores how geopolitical tensions between the US and China are increasingly influencing the global artificial intelligence industry, where competition now extends beyond innovation to include data security, software trust and corporate governance.