In an announcement made on Tuesday, Alibaba Group (9988.HK) revealed that its CEO and chairman, Daniel Zhang, will relinquish his positions to concentrate on leading the company’s cloud division.
This move is in alignment with Alibaba’s strategy to divide itself into six separate business units.
This decision comes after Zhang had been serving concurrently in three positions since December, when he assumed leadership of the cloud unit following a major outage that the company described as its most significant failure in over a decade.
Eddie Yongming Wu, chairman of Alibaba’s Taobao and Tmall Group, will take over as CEO, while Executive Vice Chairman Joseph Tsai will assume the role of chairman, both effective from September 10, according to Alibaba’s statement.
The appointment of Zhang to focus on the cloud division is seen as a testament to his capabilities and trust to lead the crucial business, particularly in the era of generative artificial intelligence (AI).
The unexpected reshuffle comes after a challenging period of increased regulatory scrutiny for Alibaba, prompting the company’s decision in March to restructure into six units, each with its own boards and CEOs.
While Alibaba’s China-facing e-commerce division, including Taobao and Tmall, will remain fully owned by the company, the other five units will be spun off.
In May, Alibaba announced its aim to complete the public listing of its cloud unit within the next 12 months.
Zhang explained in a memo to staff that the cloud spin-off is entering a critical stage, and he believes it is the right time for him to focus on this business.
He emphasized the need for clear separation between the board and management team as the Cloud Intelligence Group progresses toward becoming an independent public company.
Therefore, it would be inappropriate for him to continue serving as chairman and CEO of both companies during the spin-off process.
Industry analysts estimate the value of Alibaba’s cloud unit to be between $41 billion and $60 billion.
However, concerns have been raised regarding the extensive amount of data it oversees, which could attract regulatory scrutiny both domestically and internationally.
Zhang, who joined Alibaba in 2007 and is credited with creating the company’s annual “Singles Day” shopping festival, has been the CEO since 2015 and took on the role of chairman in 2019, succeeding Alibaba co-founder Jack Ma.
Alibaba expressed gratitude to Zhang for his exceptional leadership in navigating the unprecedented challenges that have impacted the company’s business in recent years.
Under Zhang’s guidance, Alibaba has become one of the world’s largest e-commerce giants and has expanded into various sectors, including cloud computing, digital entertainment, and fintech.
Following the announcement, Alibaba’s shares on the Hong Kong stock exchange experienced a 1.5% decline, in line with the broader market index.
Analysts view the reshuffle as consistent with the previously announced restructuring plans, which aim to improve corporate governance and streamline operations within the different business units.
Eddie Yongming Wu, one of Alibaba’s co-founders alongside Ma and Tsai, will continue to serve as chairman of Taobao and Tmall Group in addition to his new role as CEO.
Wu is a seasoned executive with a deep understanding of Alibaba’s operations and has played instrumental roles in key areas of the business, including serving as the chief technology officer of Alipay and the chairman of Alibaba Health.
Industry experts perceive Wu’s elevation to CEO as a natural transition that underscores the unwavering importance of e-commerce in Alibaba’s strategic roadmap.
E-commerce has been the cornerstone of Alibaba’s success, and it continues to be a key driver of the company’s growth.
With the rapid advancement of technology and the increasing reliance on digital platforms, Alibaba aims to leverage AI and other emerging technologies to further enhance its e-commerce capabilities and create a unified and tailored shopping immersive experience for its customers.