Alibaba Group Holding Ltd. is initiating a strategic overhaul of its cloud business, signaling a renewed focus on growth and capitalizing on the burgeoning field of artificial intelligence (AI). This move comes in the wake of the company’s decision to abandon the much-anticipated spinoff of its $11 billion cloud unit. The restructuring involves a significant shakeup in leadership, with the appointment of three new executives to spearhead key business segments within Alibaba Cloud Intelligence.
In an effort to regain lost market share, Alibaba has chosen to revamp its leadership structure after the recent setback of canceling the Cloud Intelligence business spinoff, which led to a substantial $24 billion sell-off over a two-day period. The reshuffle is aimed at providing clarity in reporting lines after almost a year of management upheaval, beginning with the departure of former president Jeff Zhang in 2022. Since then, Alibaba Cloud has operated without a long-term CEO, with Daniel Zhang briefly overseeing the business after stepping down as Alibaba’s group CEO in June, only to resign approximately three months later.
Liu Weiguang has been appointed to lead the public cloud division, focusing on domestic cloud services for enterprise customers in China. This strategic move is intended to counter competition from state-backed rivals. Joining Liu are two other seasoned executives who will oversee the smaller divisions of hybrid cloud services and cloud infrastructure, collectively addressing the majority of the Chinese market. The organizational changes were initially reported by Leifeng. Eddie Wu, currently serving as the interim CEO and chairman of the cloud unit, will have two executives reporting directly to him.
Alibaba Cloud, a linchpin in the company’s AI initiatives, has played a pivotal role in hosting half of China’s generative AI firms and catering to around 80% of the country’s technology companies, according to Alibaba Chairman Joseph Tsai. Notably, Alibaba has introduced its own extensive language model, Tongyi Qianwen, and invested in promising startups such as Zhipu AI and Baichuan.
While these executive appointments are pivotal in realigning Alibaba’s cloud strategy, they may also foreshadow broader restructuring efforts following the unexpected cancellation of the spinoff. This reversal has raised questions about the efficacy of a previously outlined historic overhaul, designed to rejuvenate the fortunes of the Chinese tech giant amid a broader crackdown on the tech sector. Additionally, the decision coincides with a notable deceleration in topline growth at the cloud arm, attributed in part to competitors like China Telecom Corp. attracting business customers in recent years.
