Alibaba Group To Split In Major Restructure

Alibaba Group is to split into six independent units in the $257 billion (£209bn) tech giant’s biggest overhaul since it was founded more than two decades ago in Jack Ma’s Hangzhou apartment.

The move follows years of intense pressure by Chinese regulators seeking to reduce the influence of the country’s biggest tech conglomerates.

The crackdown coincided with the disappearance from the spotlight of Jack Ma himself, who only days ago returned to the mainland after a year of travels abroad.

Alibaba said the six groups would focus on cloud, ecommerce, smart logistics, local services, global digital business and digital media and entertainment.

Business split

Group chief executive Daniel Zhang is to head the Cloud Intelligence Group, highlighting the growing importance of AI and cloud technologies.

The business is Alibaba’s fastest-growing, and represents China’s biggest cloud services operation.

But nearly 70 percent of the group’s overall 170bn yuan ($24.7bn, £20bn) third-quarter revenue came from its world-leading e-commerce platforms, mainly Taobao and Tmall.

The Taobao-Tmall unit is to be headed by Trudy Dai.

‘Entrepreneurial spirit’

“Every [Alibaba employee], no matter which business group or company he or she is in, must rediscover his or her entrepreneurial spirit and be baptised by the market through your passion and strength, and build a future that belongs to you,” said Zhang in an email to employees on Tuesday.

He said each group would make autonomous business decisions, including finding individual fundraising, raising the prospect of multiple initial public offerings.

Alibaba’s share price jumped 8 percent in pre-market trading in New York.

“This transformation will empower all our businesses to become more agile, enhance decision-making, and enable faster responses to market changes,” Zhang said. “With this change, middle and back office functions at [Alibaba] will be slimmed down, while only functions required for listed company compliance will be retained.”

Crackdown

Chinese authorities have been signalling an end to their crackdown on tech giants, as those companies introduce major structural changes to comply with regulators’ wishes.

Alibaba and its spin-off Ant Group have made some of the biggest changes, including Jack Ma ceding control of the fintech organisation  earlier this year.