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Alibaba CEO Daniel Zhang unexpectedly leaves cloud business

Written by Tue 12 Sep 2023

Alibaba has announced that CEO Daniel Zhang will step down from its cloud business just months after a significant restructuring. Following Zhang’s resignation, Alibaba stock dropped 4%.

The company announced Zhang’s decision to depart as Chairman and CEO of its Cloud Intelligence Group in an internal letter to staff.

“The board of our company expresses its deepest appreciation to Mr Zhang for his contributions to Alibaba Group over the past 16 years,” said Alibaba in a statement.

Eddie Wu will replace Zhang as Group CEO, and Joseph Tsai will take over as Chairman.

“Eddie Wu, being part of the original group of founders and closely aligned to Jack Ma, should bring fresh energy to the business,” said Vey-Sern Ling, Managing Director at Union Bancaire Privee, to Reuters.

In a company first, Alibaba has given Zhang an ’emeritus’ title. The former Group CEO will continue to contribute to Alibaba by ‘channelling his expertise differently’ in a £799 million ($1 billion) technology fund.

The fund will support Alibaba’s strategy of investing for future growth and continuing to develop its technology ecosystem.

Alibaba’s Restructuring

In May, Alibaba announced a significant restructuring, with plans to spin off its cloud division as a separate, publicly listed entity by May 2024.

At the time, Zhang was announced as the new Cloud Intelligence Group’s Chairman and CEO.

Earlier this year, the unit was valued at between £32 billion ($41 billion) to £47 billion ($60 billion).

The unit’s revenue fell for the first time from January to March, decreasing by 2%. This decline was partially due to project delays.

With the unit holding the second-highest revenue generation within the company, the success of the Cloud Intelligence Group’s spin-off has been questioned.

“Investors may be concerned that the timing and process of AliCloud’s spin-off may be affected,” said Alicia Yap, Citi Analyst, to Reuters.

The restructuring also involved breaking the company into six different units, with each due to have its own boards and CEOs.

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Written by Tue 12 Sep 2023

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