Departing Alibaba chief Daniel Zhang steps down from cloud unit

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Alibaba chief executive Daniel Zhang has stepped down as head of the company’s cloud division, a role he took over last year, as the Chinese ecommerce group commences its break-up into six units.

The company announced on Monday that Zhang had given up his role as head of Alibaba’s cloud division, in an unexpected move coming at the same time he ceded the chairmanship to co-founder Joseph Tsai and the position of chief executive to Eddie Yongming Wu.

Alibaba announced in March that it would break up its business empire, which spans across ecommerce and entertainment and has a market capitalisation of $230bn.

Zhang, who has served as chief executive for eight years, was appointed to lead the company’s cloud business, with the group citing his move as testament to the unit’s “importance”. Wu will now take over as head of the cloud division.

“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 is leaving the cloud unit, one of China’s largest by market share, before it is set to be spun off from Alibaba.

“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,” they added.

Alibaba did not immediately respond to a request for comment.

Zhang took over from co-founder Jack Ma as chief in 2015 and as chair in 2019. The last years of his 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 it was forced to stop its alleged monopolistic business practices.

“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 announced in the letter that Alibaba would invest $1bn in a new technology fund founded by Zhang.

Wu is a close associate of the charismatic Alibaba co-founder Ma, having served as his special assistant before leading the group’s healthcare arm and launching venture capital firm Vision Plus Capital.

His appointment as chief executive is widely seen by analysts and company insiders as a move that allows Ma to reassert control over the group through his previous mentee.

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 has lost 70 per cent of its value since its peak three years ago.

News of Zhang’s departure sent Alibaba’s shares down 3.5 per cent in Hong Kong on Monday morning. 

“The stock reaction likely reflects concerns 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.