Alibaba CEO Daniel Zhang steps down just two months after taking charge of cloud business

In an unexpected move, China’s Alibaba Group announced on Sunday that Daniel Zhang would step down from his role in the company’s cloud business. This development comes just two months after it was revealed that Zhang would leave his positions as group CEO and chairman to focus on the cloud unit.

Zhang had been simultaneously serving in three roles, leading the group and overseeing the cloud intelligence unit, which is China’s largest cloud provider and is set to be spun off from Alibaba as part of the company’s restructuring.

The decision for Zhang to depart the cloud unit was communicated in an internal letter to staff, as reported by Reuters. Zhang had been scheduled to hand over the role of group CEO to Eddie Wu on Sunday, and the same letter stated that Wu would also take charge of the cloud business following Zhang’s departure.

Alibaba issued a statement expressing appreciation for Zhang’s contributions over his 16 years with the company. However, there was no immediate response to requests for comment from Zhang himself.

The cloud business is a significant component of Alibaba’s restructuring announced in March, dividing the company into six units, each with its own CEO and board. In May, Alibaba announced its intention to complete the public listing of its cloud unit within the next year. The company now states that it will continue to execute the spin-off plan under a newly appointed management team.

Analysts have estimated the value of the cloud unit to be between $41 billion to $60 billion. However, the vast amount of data it handles has raised concerns about potential regulatory scrutiny both in China and internationally.

The internal letter, signed by Alibaba co-founder Joseph Tsai, who assumed the chairman role from Zhang as planned on Sunday, mentioned Zhang’s wish to transition away from his role as chairman and CEO of the Cloud Intelligence Group. The Alibaba board accepted this decision and appointed Eddie as acting chairman and CEO of the Cloud Intelligence Group.

The letter also noted that Zhang would continue to contribute to Alibaba in a different capacity. The company announced a $1 billion investment in a technology fund that Zhang will establish. Additionally, Zhang was given the title of “emeritus,” a first in Alibaba’s history, indicating his lasting connection with the company.

Zhang had taken over as the head of Alibaba’s cloud unit in December, following a significant outage the unit experienced. He joined Alibaba in 2007 and is known for spearheading the company’s annual “Singles Day” shopping festival. Zhang became CEO in 2015 and took on the role of chairman in 2019, succeeding both positions from Alibaba co-founder Jack Ma.

During his tenure, Zhang led Alibaba through a turbulent period characterized by increased regulatory scrutiny on the tech giant.