Still, Wu taking over and Zhang departing could mark a turnaround for a company subjected to about two years of intense regulatory scrutiny during Zhang's tenure, analysts said. "For example, Alibaba Cloud's potential customers may worry about the sharing of their data with Alibaba," she said. Morningstar's Tam said Wu's appointment to acting cloud CEO could raise governance concerns and invalidate benefits that would have arisen from having different CEOs. He said it would be "inappropriate" for him to continue in his group and unit roles. In June, when Alibaba announced that Zhang would wholly focus on the cloud unit, he said he was doing so due to a need for clear separation between board and management as the unit pursued a spin-off. Zhang, who succeeded leading co-founder Jack Ma as group CEO in 2015 and chair in 2019, took charge of the cloud unit in December after an outage it described as its "longest major-scale failure" in over a decade. Still, analysts estimate it is China's largest cloud provider with a 34% market share, ahead of Huawei Technologies, Tencent Holdings and Baidu. The cloud unit's revenue fell for the first time in January-March, by 2%, due to delayed projects and other factors. Messaging app DingTalk is to be split off into a separate entity, two people close to Alibaba told Reuters last month. The cloud unit is Alibaba's second-biggest revenue source after domestic e-commerce and houses DingTalk and the group's generative artificial intelligence model Tongyi Qianwen. The same day, Zhang handed the group CEO role to Wu and chairpersonship to co-founder Joseph Tsai, as scheduled. Cloud as key revenue sourceĪlibaba announced Zhang's decision to exit the cloud unit in a staff letter on Sunday seen by Reuters, without disclosing reasons, and said he would set up a technology fund. Its share price fell as much as 4.4% to HK$86.85 ($11.08), its lowest since Aug. "Investors may be concerned that the timing and process of AliCloud's spin-off may be affected."Īlibaba did not immediately respond to a request for comment over such concern.
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