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Alibaba’s former chief executive Daniel Zhang has unexpectedly also stepped down as head of the company’s cloud computing division as the Chinese ecommerce group starts its break-up into six units.
The move comes as part of a leadership transition at Alibaba, which had already said Zhang would cede the position of group chair to co-founder Joseph Tsai and would hand over the role of group chief executive to Eddie Yongming Wu.
Alibaba said in March that it would break up its business empire, which spans ecommerce and entertainment and has a market capitalisation of $230bn.
Zhang, who was Alibaba’s chief executive for eight years, had been expected to continue to lead the company’s cloud business into a planned spin-off, with the group highlighting the unit’s importance. Wu will now take over as head of the cloud division, one of China’s largest by market share.
“The company will continue to execute its previously announced plan to spin off Alibaba Cloud Intelligence Group under a separate management team to be appointed,” the group said in a statement.
Zhang’s handover of his group roles to Wu and Tsai took place on Sunday.
“The timing is peculiar on the day the transition was set to take place,” said one Alibaba insider, adding that cloud division employees were “very surprised at the announcement”.
“If you’re going to do a graceful transition, there is a question about why the announcement is coming on the day the planned changes were set to take place,” the person added.
Alibaba did not immediately respond to a request for comment.
Zhang took over from Alibaba’s charismatic co-founder Jack Ma as chief executive in 2015, and as chair in 2019. The last years of Zhang’s tenure were mired by a regulatory crackdown on the internet sector, with Beijing targeting Alibaba for its anti-competitive behaviour and fining it $2.8bn for abusing market dominance.
Rivals ByteDance and Pinduoduo are also challenging Alibaba in its core domestic ecommerce business.
“After taking the helm as chair four years ago, Daniel confronted myriad challenges, including the Covid-19 pandemic and dramatic changes in the business environment. Yet, with his steady hand, Alibaba navigated and overcame challenges with grace and fortitude,” incoming chair Tsai wrote in a letter to employees seen by the Financial Times.
Tsai also said in the letter that Alibaba would invest $1bn in a new technology fund founded by Zhang.
Wu is a close associate of Ma, having served as his special assistant before leading the group’s healthcare arm and launching venture capital firm Vision Plus Capital.
Wu’s appointment as chief executive is widely seen by analysts and company insiders as a move to allow Ma to reassert control over the group.
Ma has kept a low profile since the initial public offering of Alibaba’s fintech arm, Ant Financial, was cancelled following a speech he gave in 2020 lambasting China’s financial watchdog and banks.
The company leadership hopes the group’s overhaul will unlock value for shareholders after its share price fell 70 per cent since its peak three years ago.
News of Zhang’s departure sent Alibaba’s shares down 2.7 per cent in Hong Kong on Monday.
“The stock reaction likely reflects concerns [that] this delays the Alibaba Cloud spin-off, given the Hong Kong Stock Exchange’s rules around management continuity prior to listing,” said Bernstein’s China internet analyst Robin Zhu.