Last Updated on September 11, 2023 by Robert C. Hoopes
Title: Alibaba CEO Daniel Zhang Steps Down from Cloud Business Amidst Financial Challenges
In a surprising turn of events, Daniel Zhang, chairman and CEO of Alibaba Group, announced his departure from the company’s cloud business just two months after revealing his intention to step down as group CEO and chairman. Zhang attributed the company’s financial challenges in the fiscal year 2021-2022 to the lingering uncertainties caused by Covid-19, new expectations for China’s internet sector, and frequent geopolitical conflicts.
Zhang, who had been concurrently serving in three roles including heading the group, the cloud intelligence unit, and China’s largest cloud provider, made the decision to prioritize his focus on the cloud unit, leading to his departure from his cloud-related responsibilities. The cloud unit is set to be spun off from Alibaba as part of the company’s ongoing restructuring strategy, and Zhang’s decision was communicated through an internal letter to staff.
As part of the restructuring plan, Eddie Wu, the scheduled successor to the role of group CEO, will now assume leadership of the cloud business following Zhang’s departure. Alibaba aims to complete the public listing of its cloud unit within the next 12 months, with analysts estimating its worth to be between $41 billion and $60 billion. However, concerns regarding regulatory scrutiny due to the massive amount of data overseen by the cloud unit exist.
Despite stepping down from his executive roles, Zhang will continue to contribute to Alibaba’s growth by establishing a $1 billion technology fund in which the company will invest. This move highlights Zhang’s ongoing commitment to the company and his belief in the future potential of Alibaba’s technological advancement.
Following Zhang’s departure, Joseph Tsai, co-founder of Alibaba, has taken over as chairman as planned. Zhang, who joined Alibaba in 2007, has been instrumental in the company’s growth and success. He is particularly renowned for creating the annual “Singles Day” shopping festival and managing Alibaba during a period of increased regulatory scrutiny.
With the challenges posed by the ongoing pandemic, evolving expectations in China’s internet sector, and geopolitical conflicts, Alibaba faces significant hurdles. However, the company remains determined to leverage its cloud expertise and successfully spin off its cloud unit under a separate management team. Amidst these changes, Zhang’s continued involvement through his technology fund demonstrates a commitment to overcoming obstacles and driving innovation within the company.
As Alibaba navigates this transition, industry experts will closely watch the progress of its cloud unit listing and its ability to effectively manage regulatory scrutiny, while also looking forward to the potential long-term impact of Zhang’s $1 billion technology fund.