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A report this week revealing the software feature made Alibaba, one of the world's most valuable companies, the latest Chinese corporate entity embroiled in the controversy over China's of .

In a statement posted online late on Thursday, Alibaba said it was "dismayed to learn" that Alibaba Cloud developed the feature.

The technology was used only in for capability-testing and not deployed by any customer, Alibaba said, adding that it had "eliminated any ethnic tag" in its products.

"We do not and will not permit our technology to be used to target or identify specific ethnic groups," it said.

The Uighur issue looms as a worrying threat for Chinese companies as global criticism grows over Beijing's policies in the northwest region of Xinjiang.

Rights groups say as many as one million Uighurs and other mostly Muslim minorities have been held in internment camps there.

Beijing initially denied the camps' existence but now calls them vocational training centres aimed at offering alternatives to religious extremism.

China's Uighurs, a Muslim people of Turkic origin, have for decades chafed at Chinese control, anger that has periodically exploded into deadly violence.

Surveillance spending in Xinjiang has risen sharply in recent years, with facial recognition and other technologies deployed across the province.

Washington last year blacklisted eight Chinese tech firms for alleged links to the surveillance effort.

Last week, US-based surveillance research firm IPVM said Chinese telecoms company Huawei had been involved in testing facial-recognition software that could send alerts to police when Uighur faces were recognised.

Huawei denied the claim.

But the controversy caused Barcelona's World Cup-winning French football star Antoine Griezmann to sever an endorsement deal with Huawei.

Alibaba is the leader in China's huge e-commerce sector, projecting a sunny image to the world epitomised by globe-trotting founder and billionaire former chairman Jack Ma. 

It has also moved into cloud computing, bricks-and-mortar retail and delivery services, as well as an overseas expansion.

The Trump administration has imposed an escalating series of US sanctions against Huawei over alleged digital collusion with Chinese state security and has hinted at applying pressure on other companies, possibly including Alibaba.

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