Alibaba Group has announced that its CEO and Chairman, Daniel Zhang, will step down from his roles to concentrate on the company’s cloud division.

This move comes as the China-based e-commerce giant moves forward with its plan to split into six separate business units.

Zhang had served in three positions concurrently since December, when he took charge of the cloud unit following a significant outage.

The CEO position will be handed over to Eddie Yongming Wu, the chairman of Alibaba’s Taobao and Tmall Group.

The executive vice-chairman Joseph Tsai will assume the role of chairman. Both appointments will take effect on 10 September.

Zhang’s focus on cloud division signals confidence and trust

According to a former Alibaba employee Brian Wong, author of the book “The Tao of Alibaba,” appointing Zhang to focus on the cloud division demonstrates confidence and trust in his ability to develop the business in the age of generative artificial intelligence (AI).

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Wong also believes that expecting one person to manage both the cloud division and the entire Alibaba Group is an unreasonable expectation.

This reshuffling comes after a turbulent two years for Alibaba, with increased regulatory scrutiny and the company’s decision to restructure into six units with their own boards and CEOs.

Alibaba’s cloud unit spin-off and Zhang’s memo to staff

Alibaba plans to spin off its cloud unit to complete its public listing within the next 12 months. In a memo to staff seen by Reuters, Zhang stated that the cloud spin-off is reaching a crucial stage, making it the appropriate time for him to focus on the business.

Zhang emphasised the need for a clear separation between the board and management teams as the Cloud Intelligence Group progresses toward becoming an independent public company.

Analysts estimate the cloud unit to be valued between $41bn and $60bn. However, concerns about regulatory scrutiny regarding the vast amount of data overseen by the unit have also been raised.

Zhang’s contributions and Alibaba’s leadership transition

Zhang, who joined Alibaba in 2007, is known for his role in creating the company’s annual flagship shopping festival, ‘Singles Day.’ He took over as CEO in 2015 and became chairman in 2019, succeeding Jack Ma, the co-founder of Alibaba.

Alibaba expressed gratitude to Zhang for his exceptional leadership during a challenging period for the company. The reshuffle, seen in line with the previously announced restructuring, led to a 1.5% decline in Alibaba’s Hong Kong-listed shares.

Analysts believe appointing Alibaba founders Joe and Eddie as chairman and CEO will ensure a smooth leadership transition and maintain the company’s culture.

Jack Ma’s involvement and competition in the tech industry

Alibaba’s co-founder Jack Ma, who has been absent from the public eye since late 2020 following his critical remarks about Chinese regulation, remains the company’s largest shareholder.

In mid-May, Alibaba’s president J Michael Evans stated that Ma is still deeply invested in the company and spends time in China while teaching at a university in Tokyo.

Ma recently convened a meeting with leaders from Taobao and Tmall Group, where he discussed the need to prioritise users, the internet and Taobao to stay relevant in the face of fierce competition.