May 21, 2024

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Alibaba CEO and Chairman Zhang is stepping down to focus on the cloud business

Alibaba CEO and Chairman Zhang is stepping down to focus on the cloud business
  • The management change comes after the Chinese tech giant’s restructuring
  • Zhang to focus entirely on the cloud unit
  • Joseph Tsai to succeed Zhang as Chairman of the Alibaba Group
  • Alibaba aims to complete the cloud unit listing within a year

SHANGHAI (Reuters) – Alibaba Group Inc (9988.HK) said on Tuesday that its chief executive and chairman Daniel Zhang will step down to focus on its cloud division as the Chinese e-commerce giant presses ahead with a split plan. into six business units.

Zhang has simultaneously served in three positions since December when he took over as head of the cloud unit after it suffered an outage that he described as “the longest-running large-scale failure” in more than a decade.

The CEO role will be handed to Eddie Youngming Wu, chairman of Alibaba’s Taobao and Tmall Group, while Executive Vice President Joseph Tsai will take over as chairman.

Alibaba said the appointments would take effect on Sept. 10.

“Setting Daniel to focus on running the cloud is really a show of confidence and trust in him to take the most valuable business and handle it to develop it in the right way given the age of generative artificial intelligence (AI),” said Brian Wong, former Alibaba employee and author of “The Tao of Alibaba.”

“The idea or expectation that one person can manage Crown Jewel Cloud and at the same time manage the entire Alibaba Group is an unreasonable expectation.”

The surprise cabinet reshuffle comes after two turbulent years that saw Alibaba hit hard by increased regulatory scrutiny and after the group announced in March that it would restructure into six units, each with its own boards of directors and chief executives.

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The China-facing e-commerce division, which includes marketplaces Taobao and Tmall, will remain wholly owned by Alibaba, but the other five units will be spun off. Alibaba said in May it aimed to complete a public listing of its cloud unit. over the next 12 months.

Zhang said, in a note to employees seen by Reuters, that the individual cloud business is approaching a critical stage and that this is the right time for him to devote his attention to the business.

“From a corporate governance perspective, we also need a clear separation between the board and the management team as the Cloud Intelligence Group forges its path to becoming an independent public company,” he said.

“It would be inappropriate for me to continue to serve as chairman and CEO of both companies at the same time during the separation process.”

Analysts have estimated the cloud unit to be worth between $41 and $60 billion, but said the reams of data it oversees could put it in the crosshairs of regulators at home and abroad.

Singles day

A former accountant, Zhang joined Alibaba in 2007 and is best known for being the architect behind the company’s flagship annual singles’ day shopping festival. He has served as CEO since 2015 and assumed the presidency in 2019, succeeding both positions from Alibaba founder Jack Ma.

Alibaba thanked Zhang for his “extraordinary leadership in dealing with the unprecedented uncertainties that have affected the company’s business over the past few years.”

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Hong Kong-listed Alibaba shares fell 1.5% after the announcement, in line with a 1.6% drop in the benchmark index (.HSI), as analysts saw the reshuffle in line with the sweeping restructuring previously announced.

“Under the new structure, the group will play a smaller role in setting strategies for the six business groups, so planting Alibaba founders Joe and Eddie as president and CEO will likely serve the purpose of ensuring a smooth transition of leadership and preservation of culture,” Shanghai-based Independent analyst Eric Chen said. Which is posted on Smart Karma, Reuters.

Alibaba said Wu, who co-founded Alibaba along with Ma and Tsai more than two decades ago, will continue to concurrently serve as chairman of Taobao and Tmall Group. His previous roles include Chief Technology Officer of Alipay and Chairman of the Board of Directors of Alibaba Health.

Jacob Cook, co-founder and CEO of WPIC Marketing + Technologies, a Beijing-based e-commerce consulting firm, said Wu’s promotion to CEO “is a natural transition and signals the enduring importance of e-commerce to the company’s roadmap.”

Cook said he doesn’t see the leadership changes as signaling a major strategic shift within Alibaba, given that individuals are the founders of a company and their close partners.

“If anything, it underscores the growing importance of AI in the company’s focus, while also emphasizing that e-commerce is the core business unit.”

a race

Ma, China’s most well-known businessman, has kept out of the public eye since late 2020 after a speech criticizing the Chinese regulation, which is widely seen as launching an ensuing crackdown.

Ma left mainland China in late 2021 — appearing in photos in Japan, Spain, Australia and Thailand — and returned in March, the day before Alibaba announced its restructuring. He made no public comments during that time.

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And last week, Alibaba Chairman J. Michael Evans said Ma remained Alibaba’s largest shareholder and cared very much about the company. He said Ma was studying at the University of Tokyo and was also spending more time in China.

Chinese technology news agency LatePost reported on Monday that Ma held a meeting with leaders from Taobao and the Tmall Group where he highlighted stiff competition and discussed the need to refocus on users, the Internet, and Taobao — whose merchants are mostly individuals or small businesses — to stay connected.

Alibaba did not respond to a Reuters request for comment on the LatePost report, which cited company sources.

Additional reporting by Abhinaya Vijayaraghavan in Bengaluru and Brinda Goh in Shanghai; Additional reporting by Scott Murdoch in Sydney, Anne-Marie Roowntree and Josh Yee in Hong Kong; Editing by Muralikumar Anantharaman and Christopher Cushing

Our standards: Thomson Reuters Trust Principles.

Brenda Goh

Thomson Reuters

Brenda Goh is Reuters’ Shanghai bureau chief, overseeing corporate coverage in China. Brenda joined Reuters as an intern in London in 2010 and has published stories from more than a dozen countries. Contact (only used for reference): +442071932810

Casey Hall

Thomson Reuters

Casey has reported on consumer culture in China from her base in Shanghai for over a decade, covering what Chinese consumers buy, and the broader social and economic trends driving these consumption trends. The Australian-born journalist has lived in China since 2007.