The Chinese online commerce giant Alibaba has announced significant changes in its leadership team as the company prepares to drive its business in new directions.
According to a press release published in June, Daniel Zhang, who was the Chairman of Alibaba’s Board of Directors, will be succeeded by Joseph Tsai in this position. Tsai previously served as Executive Vice Chairman of the board.
Meanwhile, Zhang, who also served as the company’s Chief Executive Officer, will be replaced by Eddie Yongming Wu in this role. Zhang will continue to serve as Executive Chairman and President of Alibaba Cloud Intelligence Group, which manages the company’s assets in the cloud computing segment.
Zhang has been leading the Alibaba Group for eight years and served as Chairman of the Board for the past four years in the absence of the renowned company founder, Jack Ma, who was forced into hiding after several disputes with the Chinese authorities.
Since 2020, Ma refrained from appearing publicly, and many speculated about his whereabouts and future due to his strong and controversial statements against the Chinese Communist Party and its approach to business and technological development and innovation.
In March of this year, some reports circulated about his return to China after visiting a school founded by Alibaba Group companies. During his visit to the institution, Jack Ma discussed topics related to artificial intelligence and its possible contribution to society.
Alibaba’s Business Will Be Divided into Six Parts
These recent changes in the leadership team are part of the profound restructuring that the Asian corporation is executing, resulting in the separation of the conglomerate into six different businesses.
According to the official announcement published in March of this year, the group will be divided into the following individual companies:
- Cloud Computing Group. • Local Services Group. • Intelligent Logistics Company -Cainiao. • Global Digital Commerce Group. • Tmall Taobao Commerce Group. • Entertainment and Digital Media Group.
Each company will have its own CEO and President and will operate as a separate entity from the parent company. The Alibaba Group will remain the majority shareholder in these companies.
Alibaba’s Board of Directors is betting that the valuation of these businesses separately will far exceed the market’s valuation of the group based on the “sum of the parts” methodology, which establishes that a business can be valued based on the individual value of its individual business units.
“This transformation will allow our businesses to be more agile, improve their decision-making capabilities, and respond more quickly to market changes,” commented the former CEO of the company, Zhang, in a statement sent to all company personnel regarding this transition.
Alibaba’s share price experienced a strong surge of 14% on the day this restructuring was announced. However, the shares have only gained 4.5% so far this year, despite the overall strong performance of technology stocks in 2023.
Alibaba Enters the Race to Lead the Generative AI Market
In April of this year, Alibaba announced the launch of its generative artificial intelligence solution called Tongyi Qianwen. This product will directly compete with the well-known conversational bot ChatGPT, created by the company OpenAI and launched to the market in November of last year.
Alibaba plans to integrate Tongyi Qianwen into its multiple business units to enrich the customer experience, while the solution will also be available to companies that want to strengthen their internal processes, marketing, accounting, websites, management systems, and other areas using the cloud infrastructure provided by Alibaba Cloud Intelligence Group.
The software is designed to hold conversations in Chinese and English and can perform tasks such as generating email and document summaries, creating marketing campaigns from scratch, and transcribing audio.
It can also be used to make inquiries about everyday topics such as recipes, possible travel destinations, and interesting statistics on various subjects.
This launch puts Alibaba in direct competition with American cloud computing giants Microsoft (Azure), Alphabet (Google Cloud), and Amazon (AWS), who have also released their own large language models (LLMs) to facilitate the development and launch of AI-equipped applications.
To attract more customers to its platform, Alibaba has made significant price reductions of around 40% to 50% in its cloud computing services to promote mass adoption of this technology.
During the first quarter of 2023, the cloud computing unit generated total revenue of $3.6 billion. The separation of this business is expected to be completed within the next 12 months.