Alibaba CEO and Chairman Zhang to step down to focus on cloud business

Alibaba Group announced that its CEO and chairman, Daniel Zhang, will step down from his current roles to focus on leading the company’s cloud division.
Alibaba Cloud businessThis move comes as the Chinese e-commerce giant proceeds with its plan to divide itself into six separate business units.

Since December, Daniel Zhang has been concurrently serving in three positions, including heading the cloud unit. This decision was made after the unit experienced a major outage, described as the most significant failure in over a decade.

The CEO position will be assumed by Eddie Yongming Wu, who currently serves as the chairman of Alibaba’s Taobao and Tmall Group. Joseph Tsai, the Executive Vice Chairman, will take over as the chairman, succeeding Daniel Zhang. These leadership transitions will come into effect on September 10, according to Alibaba’s announcement.

Brian Wong, a former Alibaba employee and author of the book “The Tao of Alibaba,” expressed confidence in Zhang’s ability to focus on the cloud business. Brian Wong described the appointment as a testament to Zhang’s capability to develop the cloud division in the era of generative artificial intelligence (AI). He noted that expecting one person to manage both the cloud division, considered the company’s crown jewel, and the entire Alibaba Group would be an unreasonable expectation.

This reshuffling follows a challenging period of increased regulatory scrutiny faced by Alibaba over the past two years. In March, the company announced its intention to restructure into six units, each with its own boards and CEOs. While Alibaba’s China-facing e-commerce division, encompassing Taobao and Tmall, will remain under its full ownership, the other five units will be spun off. In May, Alibaba stated its aim to complete the public listing of its cloud unit within the next year.

Daniel Zhang, in a memo to staff viewed by Reuters, emphasized that the cloud spin-off had reached a critical stage, necessitating his dedicated attention to the business. He highlighted the importance of clear separation between the board and management team from a corporate governance perspective as the Cloud Intelligence Group progresses toward becoming an independent public company. Daniel Zhang deemed it inappropriate for him to continue serving as both chairman and CEO of both companies simultaneously during the spin-off process.

Analysts estimate the value of the cloud unit to range from $41 billion to $60 billion. They acknowledge that the data overseen by the cloud division could attract regulatory scrutiny both domestically and internationally.

Eddie Yongming Wu, one of Alibaba’s co-founders alongside Jack Ma and Joseph Tsai, will retain his role as the chairman of Taobao and Tmall Group while assuming the CEO position at Alibaba. Wu’s previous positions include chief technology officer of Alipay and chairman of Alibaba Health.