The Financial Times reported early Saturday that Alibaba "provides tech support for Chinese military 'operations' against (US) targets", according to a White House memo provided to the newspaper.
The memo claimed that Alibaba hands customer data, including "IP addresses, WiFi information and payment records", to Chinese authorities and the People's Liberation Army (PLA), the report said.
The FT said it could not independently verify the claims, noting that the White House believes the actions threaten US security.
An Alibaba Group spokesperson told AFP "the assertions and innuendos in the article are completely false".
The Hangzhou-based firm called the memo a "malicious PR operation (that) clearly came from a rogue voice looking to undermine President Trump's recent trade deal with China".
The dispute highlights persisting suspicions between Beijing and Washington, which are locked in competition for technological superiority.
Since returning to office in January, US President Donald Trump has reignited a fierce trade war with China.
After months of tit-for-tat tariffs, he and counterpart Xi Jinping agreed to a one-year truce late last month.
A spokesman for China's embassy in the United States also denied the reported memo's claims.
"The Chinese government... will never require companies or individuals to collect or provide data located in foreign countries in violation of local laws," said Liu Pengyu in a statement on X.
The report adds to growing concern in Washington about China's potential use of advanced technology to spy.
On Thursday, California-based artificial intelligence firm Anthropic said it had detected and disrupted what it described as the first documented cyber-espionage campaign conducted largely autonomously by AI.
The activities were attributed to a "Chinese state-sponsored group" designated as GTG-1002, Anthropic said.
Asked about the report at a news conference on Friday, Chinese foreign ministry spokesman Lin Jian said he was "not familiar with the specifics", adding that Beijing had consistently fought hacking activities.
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