Alibaba Group, the Chinese multinational conglomerate, is set for a leadership shakeup as its current CEO and Chairman, Daniel Zhang, steps down from his roles and focuses solely on the company’s cloud business. The announcement, made on Tuesday, comes just months after the company underwent a significant organizational overhaul, splitting it into six separate entities, each with its own CEO and board of directors. Zhang was appointed CEO and Chairman of the cloud business, as well as overall group CEO and Chairman.
Last month, Alibaba revealed that it plans to spin off its cloud unit within a year and operate it as an independent publicly listed company. Zhang stated that the move was necessary due to “challenges and opportunities” in an uncertain economic landscape and identified cloud as one of the company’s three strategic focus areas. As a result, he will now focus exclusively on the cloud business, with Joseph C. Tsai taking over as Chairman and Eddie Wu assuming the role of CEO, as well as a directorship on the board. Tsai is currently the executive vice-chairman, while Wu is the Chairman of Alibaba’s e-commerce business, Taobao and Tmall.
The succession plan will take place over the next few months, with the new appointments set to begin on September 10th of this year. Wu will retain his role at Taobao and Tmall. Zhang, who took over as group CEO in 2015, stated that the transition was “the right time” given the importance of Alibaba’s cloud business as the spinoff plans took shape. He also noted that the emergence of generative artificial intelligence (AI) had opened up new opportunities that the cloud business was “well-positioned” to capture.
In April, Alibaba launched a partnership program aimed at driving the development of customized generative AI models and applications for companies across various verticals, including finance and petrochemicals. The company had earlier launched its own large language model, Tongyi Qianwen, which is expected to be integrated with all of Alibaba’s own business applications, including e-commerce, search, navigation, and intelligence voice assistance.
Incoming CEO Wu was the CTO of Alipay since December 2004 and the chief architect of Alibaba’s technology platforms, including the Taobao mobile app, according to Alibaba. He was also the technology director at the company’s inception in 1999.
Zhang had previously explained that the organizational restructure would allow the respective businesses to be more agile and empower decision-making, enabling them to respond more quickly to market changes. The move was described as the most significant governance overhaul in Alibaba’s 24-year history.
Alibaba’s cloud business has been a significant growth driver for the company, with revenues increasing by 58% year-on-year in the March quarter. The company has been investing heavily in cloud infrastructure, including data centers and network technologies, to support its growing customer base. The spinoff of the cloud unit is expected to unlock additional value for the company and enable it to focus more on its core businesses.
The leadership shakeup comes at a time when Alibaba is facing increased regulatory scrutiny in China, with the government cracking down on tech companies’ monopolistic practices. The company was recently fined a record $2.8 billion for antitrust violations, and there are concerns that further regulatory action could be taken. However, Alibaba has stated that it will comply with all regulatory requirements and work to resolve any issues.
Overall, the leadership shakeup at Alibaba is a significant development for the company as it seeks to focus more on its cloud business and unlock additional value for shareholders. The new appointments of Tsai and Wu are expected to bring fresh perspectives and ideas to the company, enabling it to continue to innovate and grow in the highly competitive tech industry.