Former Alibaba CEO steps down from the cloud unit in surprise move leading to its stock drop of 4%. The Hong Kong listed shares of China’s Alibaba stock drop was more than 4 per cent on Monday. This was after the surprise departure of former Alibaba cloud CEO Daniel Zhang from the technology giant’s cloud computing business.
Alibaba CEO steps down after the company announced Mr. Zhang’s decision to depart the unit in an internal letter to staff, with co-founder Eddie Wu becoming the Alibaba cloud’s acting CEO and chairman. Mr. Zhang Alibaba CEO stepped down and handed over the role of group CEO to Mr. Wu on Sunday as scheduled.
Alibaba CEO steps down
The Alibaba cloud unit is China’s largest cloud provider with a 34 per cent share of the market, research consultancy Canalys said in June. It also houses DAMO Academy, Alibaba’s research arm for chips and artificial intelligence, and is set to be spun off from Alibaba by May next year as part of the group’s restructuring.
Mr. Zhang had previously been concurrently heading the group as well as the cloud intelligence unit, and the company announced in June that he would leave his group roles to wholly focus on the cloud business.
Li Chengdong, head of e-commerce focused, Beijing-based Haitun think tank, said Alibaba Cloud CEO departure looked like a personal decision and came as the company faces growing competition from state-owned telecom companies and Huawei Technologies, as well as a tighter regulatory environment.
“Alibaba Cloud has lost some ground with government and state-owned enterprise clients, which were previously a stronghold for the company,” Mr. Li said.
“During his leadership tenure, Alibaba Cloud’s business did not improve significantly despite his efforts. Zhang likely realized that the challenges facing Alibaba Cloud’s lackluster growth were beyond what he could influence or control as an individual executive.”
Alibaba CEO steps down-impact
Mr. Li said he did not see Alibaba CEO stepping down as having much impact on Alibaba Cloud’s listing plans as it would ultimately depend on the unit’s business performance.
Alibaba said it would continue to execute the spin-off plan under a separate, to-be-appointed management team.
Ling Vey-Sern, managing director at Union Bancaire Privee, said he viewed the largest cloud provider CEO stepping down as positive as it would allow Alibaba and the cloud business to start from a “clean slate”.
Alibaba stock
Regarding the Alibaba stock drop, Ling Vey-Sern noted that macro and geopolitical concerns over China also weighed.
Alibaba’s stock dropped as much as 4.4 per cent to HK$86.85, its lowest since Aug 23.
Alibaba on Mr. Zhang’s stepping down as CEO
Alibaba said in its letter that Mr. Zhang will continue to contribute to Alibaba by “channeling his expertise differently” and that it will invest US$1 billion (S$1.37 billion) into a technology fund that Mr. Zhang would establish.
Alibaba also gave Mr. Zhang an “emeritus” title, a first in its history.
Analysts have estimated the Alibaba cloud unit to be worth US$41 billion to US$60 billion but have said the reams of data it oversees could put it in the crosshairs of regulators at home and abroad.
The cloud business is a major part of a restructuring Alibaba announced in March that breaks the company up into six units, each with its own boards and CEOs.
All about Alibaba cloud CEO
Mr Zhang took over as head of Alibaba’s cloud unit in December after it suffered an outage that it described as its “longest major-scale failure” for over a decade.
A former accountant, Mr Zhang joined Alibaba in 2007 and is known for being the architect behind the company’s annual flagship Singles’ Day shopping festival. He was appointed Alibaba cloud CEO in 2015 and took on the chairmanship in 2019, succeeding both roles from Alibaba co-founder Jack Ma.
His final years as head of the group saw him manage the tech giant through a tumultuous two years that saw Alibaba heavily targeted by increased regulatory scrutiny.
