Daniel Zhang Leaves Alibaba’s Cloud Unit amidst Restructuring

UTC by Chimamanda U. Martha · 4 min read
Daniel Zhang Leaves Alibaba’s Cloud Unit amidst Restructuring
Photo: World Economic Forum / Flickr

After 16 years of service to the firm, Zhang is ready to move on to the next career phase. Alibaba expressed gratitude for his work at the company. 

In a surprising turn of events on Sunday, Daniel Zhang, the former chief executive and chairman of Chinese tech giant Alibaba Group, has stepped down as head of the company’s cloud division. This decision comes less than nine months after Zhang took over the unit.

The move is part of the company’s larger restructuring plan, which saw Zhang relinquish his role as the chief executive and chairman of Alibaba Group in June to focus on leading the cloud business. However, in an internal memo sent to staff on August 10, the company said that Zhang would resign from his position as the CEO of the cloud unit.

Alibaba to Invest $1 Billion to Support Zhang for New Tech Fund

The former Alibaba chairman expressed his wish to leave the company, which was immediately granted with the firm appointing Eddie Wu as the new leader of the cloud unit. Wu, a co-founder of Alibaba, has had long-standing ties to Jack Ma, Alibaba’s co-founder and one of its most prominent figures.

Wu, who has been a confidant of Jack Ma for decades, will now take charge of the cloud business on an interim basis. Zhang’s resignation from the cloud division, coming just months after he assumed the role has left many wondering why he made the decision.

“Following careful consideration, the Alibaba board respected and accepted Daniel’s decision and appointed Eddie as acting chairman and CEO of Cloud Intelligence Group, effective immediately.”

In  March, when Alibaba first unveiled its restructuring plan, it was widely expected that Zhang would continue to lead the cloud division as the company moves to split into six different businesses. At that time, Zhang stated in an internal letter that the spinoff of Alibaba Cloud was in a “critical period of upward development”, and he emphasized his commitment to its success.

While Zhang’s departure from his leadership roles was unexpected, Alibaba has expressed its commitment to keeping him involved with the company. Joseph Tsai, the company’s new chairman, announced that Alibaba would invest $1 billion to support Zhang in establishing a technology fund.

According to Tsai, the fund is intended to aid Alibaba in creating a more robust ecosystem for its future technological endeavors.

Challenges and Achievements

Zhang’s tenure at Alibaba has been marked by significant challenges and accomplishments. He joined the company in 2007 and played a pivotal role in establishing China’s annual “Singles’ Day” shopping extravaganza on November 11, which helped transform the company’s Taobao platform into a profitable venture. Zhang ascended to the role of CEO in 2015 and took over as chairman from Jack Ma in 2019.

After 16 years of service to the firm, Zhang is ready to move on to the next career phase. Alibaba expressed its gratitude for his work at the company.

“The board of our company expresses its deepest appreciation to Mr Zhang for his contributions to Alibaba Group over the past 16 years,” said Alibaba in a statement seen by Reuters. 

Zhang’s stay at the company has not been all rosy. His leadership saw Alibaba’s share price experience both record highs and lows, reflecting the company’s complex journey in a rapidly evolving tech industry. China’s regulatory crackdown on the tech sector in 2020 further added to the challenges faced by Alibaba and its leadership.

A Key Growth Area for Alibaba

The company’s cloud business has been a key growth area for Alibaba in recent years. In the second quarter of this year, it was the second-largest source of revenue for the company, generating 25.12 billion yuan ($3.4 billion) in total revenue.

However, the figure marked a relatively modest 4% year-over-year growth rate, which was attributed to reduced demand from major clients and the impact of the COVID-19 pandemic.

Alibaba had announced its plans to complete the public listing of its cloud unit in May within the next 12 months. Analysts estimate the company’s value to range from $41 billion to $60 billion, but the vast amount of data it manages has drawn regulatory attention domestically and internationally.

Earlier this month, the firm announced its plans to raise $3 billion before expanding its business to Hong Kong.

Business News, Cloud Computing, News, Technology News
Chimamanda U. Martha

Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.

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