Alibaba Begins Cloud Division Overhaul After Scrapping Spinoff

(Bloomberg) -- Alibaba Group Holding Ltd. is taking the first steps toward revamping its cloud business by overhauling its leadership, aiming to revive growth and ride an AI boom after canceling a much-anticipated spinoff of the $11 billion unit.

The company has appointed three new executives to head up major business lines within Alibaba Cloud Intelligence, with two reporting directly to Chief Executive Officer Eddie Wu, a person familiar with the matter said. Key among those is the so-called public cloud — the domestic cloud services arm aimed at enterprise customers in China — which will be led by Liu Weiguang, the person said, asking not to be named as the plans are not public.

The move, intended to reclaim market share lost to state-backed rivals, comes a week after Alibaba walked back plans to spin off and list the Cloud Intelligence business, disappointing investors and precipitating a $24 billion selloff over two days. The reorganization clarifies reporting lines after nearly a year of management turmoil starting with the departure of former president Jeff Zhang in 2022. Alibaba Cloud has gone without a long-term CEO since then — Daniel Zhang briefly took charge of the business after stepping down as Alibaba’s group CEO in June, before he abruptly quit about three months later. 

Two other senior managers join Liu in the top ranks, running the smaller divisions of hybrid cloud services and cloud infrastructure. The three are veterans of the business and will split the bulk of the China market between them. The moves were earlier reported by Leifeng. Wu currently serves as interim CEO and chairman of the cloud unit.

Alibaba Cloud did not reply to a written request for comment.

The cloud division is at the heart of Alibaba’s artificial intelligence initiatives. The Hangzhou-based company has released its own large language model, Tongyi Qianwen, and is also investing in high-flying startups like Zhipu AI and Baichuan. Alibaba Chairman Joseph Tsai said last month the cloud unit now hosts half of China’s generative AI firms and serves about 80% of the country’s technology companies.

The new appointments could foreshadow a wider restructuring following Alibaba’s surprise decision last week to cancel the planned spinoff. That reversal cast doubt on an historic overhaul laid out only months earlier to try and revive the fortunes of a Chinese icon that stalled during a broader tech-sector crackdown. It also coincided with a sharp slowdown in topline growth at the cloud arm after rivals such as China Telecom Corp. lured away business customers in recent years.