Alibaba announces Daniel Zhang’s surprise departure from group’s cloud business

On Sunday, Chinese group Alibaba announced that Daniel Zhang will leave the group’s cloud business, a surprising decision coming only two months after Alibaba said Zhang would step down as group CEO and president to focus on the cloud unit.

Zhang had previously held three positions, spearheading the group as well as its cloud intelligence unit. The latter is the largest cloud provider in China, and was set to be separated from Alibaba as part of the group’s internal reorganisation.

Alibaba announced Zhang’s decision to leave the cloud unit in an internal letter addressed to staff that was seen by Reuters. Zhang was to hand over the position of group CEO to Eddie Wu on Sunday and the letter stated that Wu will also take charge of Alibaba’s cloud business following Zhang’s departure. “The board of our company expresses its deepest appreciation to Mr Zhang for his contribution to the Alibaba Group over the past 16 years,” Alibaba said in a statement, in which it merely announced that Wu would succeed Zhang in his role within the cloud unit.

The group did not immediately respond to a request to make Zhang available for comment. The cloud business is a key element in the restructuring operation heralded by Alibaba in March. The Chinese e-commerce giant is set to be split into six business units, each with its own board of directors and CEO. In May, Alibaba said that it wanted to complete the cloud unit’s stock market listing within the next 12 months. On Sunday, the group stated it will continue to execute the spin-off plan under a separate management team, to be appointed later.

Analysts have estimated the Alibaba’s cloud unit is worth between $41 billion and $60 billion, but said that the sheer amount of data it oversees could put it on the radar of national and international regulators. “Daniel has expressed his wish to transition away from his role as chairman and CEO of Cloud Intelligence Group,” the group said in the letter, which was signed by Joseph Tsai, co-founder of Alibaba, who on Sunday also succeeded Zhang as group president, as planned. “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,” indicated the letter.

Zhang will continue to contribute to Alibaba by “channelling his expertise differently,” the letter added, stating that Alibaba will invest $1 billion in a technology fund that Zhang himself will set up. The group also gave Zhang the title ‘emeritus’, a first in its history. In the letter, Alibaba further stated that “the fund will support Alibaba’s strategy of investing for future growth and continuing to develop our technology ecosystem.”

Zhang took charge of Alibaba’s cloud unit in December, after it suffered an outage it described as “the longest major-scale failure” in more than a decade.

A former accountant, Zhang joined Alibaba in 2007 and became known for masterminding the group’s leading annual shopping festival, Singles Day. He was appointed CEO in 2015 and became president in 2019, succeeding Jack Ma, co-founder of Alibaba.

Towards the end of his stint at the group’s helm, Zhang steered the tech giant through two tumultuous years, during which Alibaba was heavily targeted by increased regulatory scrutiny.