In an unexpected corporate reshuffle, Alibaba Group (9988.HK) announced on Tuesday that CEO and Chairman Daniel Zhang will relinquish his roles to concentrate on the firm's cloud business as it moves forward with a plan to break into six independent business units.
Eddie Yongming Wu, current chairman of Alibaba's Taobao and Tmall Group, will succeed Zhang as CEO, while Executive Vice Chairman Joseph Tsai will ascend to the chairman's position. Both transitions will take effect from September 10, confirmed Alibaba.
Brian Wong, a former Alibaba employee and the author of "The Tao of Alibaba", underscored the significance of Zhang's appointment to the cloud division. He stated, "The appointment of Daniel to focus on running cloud is really a show of confidence and trust in him to develop it in the right way given this age of generative artificial intelligence (AI)." He further asserted that expecting Zhang to manage the entire Alibaba Group while developing its cloud business was not reasonable.
This announcement arrives following two tumultuous years, during which Alibaba grappled with increased regulatory scrutiny and announced in March its restructuring into six units, each with its own board and CEOs.
While Alibaba will retain complete ownership of its China-facing e-commerce division, which includes Taobao and Tmall, the remaining five units will be spun off. Alibaba aims to complete the public listing of its cloud unit within the next 12 months.
In a staff memo seen by Reuters, Zhang emphasized that the cloud spin-off was reaching a crucial stage and it was apt for him to devote his attention fully to it. He noted that a clear distinction was needed between the board and management team as the Cloud Intelligence Group was on its path to becoming an independent public company.
Analysts estimate the cloud unit's worth to be between $41 billion to $60 billion but have warned that the vast data it oversees could make it a target for regulators, both domestic and foreign.
Zhang, who joined Alibaba in 2007, has served as CEO since 2015 and assumed the chairman role in 2019. Recognized as the architect of Alibaba's flagship "Singles Day" shopping festival, Zhang succeeded both roles from Alibaba co-founder Jack Ma.
Alibaba acknowledged Zhang's "extraordinary leadership in navigating unprecedented uncertainties affecting the company's business over the past few years."
After the announcement, Alibaba's Hong Kong-listed shares dropped by 1.5%, which analysts believe is consistent with the overall restructuring announced earlier.
Shanghai-based independent analyst Eric Chen opined, "Under the new structure, the group will play a smaller role in setting strategies for the six business groups... instilling Alibaba founders Joe and Eddie as chairman and CEO likely serves the purpose of ensuring smooth leadership transition and maintaining culture."
Alibaba also confirmed that Wu will continue to serve concurrently as the chairman of Taobao and Tmall Group. This move, according to Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, signals the unswerving significance of e-commerce in the company's roadmap.
