Alibaba CEO and chairman Zhang to resign to focus on cloud business

SHANGHAI - Alibaba Group on Tuesday (June 20) said its CEO and chairman Daniel Zhang will step down from the roles to focus on its cloud division as the Chinese e-commerce giant moves ahead with a plan to split into six business units.

Zhang has been concurrently serving in three roles since December when he took over as head of the cloud unit after it suffered an outage that it described as its "longest major-scale failure" for over a decade.

The CEO role will be handed over to Eddie Yongming Wu, chairman of Alibaba's Taobao and Tmall Group, while Executive Vice Chairman Joseph Tsai will take over Zhang as chairman.

Both appointments will take effect on Sept 10, Alibaba said.

The surprise reshuffle comes after a tumultuous two years that saw Alibaba heavily targeted by increased regulatory scrutiny and after the group announced in March that it would restructure into six units, each with their own boards and CEOs.

Its China-facing e-commerce division, which includes the Taobao and Tmall marketplaces, will stay wholly owned by Alibaba, but the other five units will be spun off, with Alibaba saying in May it aimed to complete the public listing of its cloud unit within the next 12 months.

Zhang, in a memo to staff seen by Reuters, said the cloud spin-off was approaching a crucial stage and that it was the right time for him to dedicate his attention to the business.

"From a corporate governance perspective, we also need clear separation between the board and management team as the Cloud Intelligence Group proceeds down the path to becoming an independent public company," he said.

"It would be inappropriate for me to continue serving as chairman and CEO of both companies at the same time during the spin-off process."

Analysts have estimated the cloud unit to be worth US$41 billion (S$55 billion) to $60 billion but have said the reams of data it oversees could put it in the cross-hairs of regulators at home and abroad.

Zhang, a former accountant, joined Alibaba in 2007 and is known for being the architect behind the company's annual flagship "Singles Day" shopping festival. He has served as CEO since 2015 and took on the chairmanship in 2019, succeeding both roles from Alibaba co-founder Jack Ma.

Alibaba thanked Zhang for his "extraordinary leadership in navigating unprecedented uncertainties affecting the company's business over the past few years."

Alibaba's Hong Kong-listed shares fell 1.5 per cent after the announcement, in line with a 1.6 per cent decline in the benchmark index, as analysts viewed the reshuffle as being in line with the overall restructuring previously announced.

"Under the new structure, the group will play a smaller role in setting strategies for the six business groups, so instilling Alibaba founders Joe and Eddie as chairman and CEO likely serves the purpose of ensuring smooth leadership transition and maintaining culture," Shanghai based Independent analyst Eric Chen, who publishes on Smartkarma, told Reuters.

Wu, who co-founded Alibaba alongside Ma and Tsai over two decades ago, will continue to concurrently serve as chairman of Taobao and Tmall Group, Alibaba said. His previous roles include chief technology officer of Alipay and chairman of Alibaba Health.

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