When former Alibaba CEO Jack Ma passed the torch to Daniel Zhang, he set up a system that regularly rotates executives to ensure the company always remains nimble in the internet space by rapid evolution. It’s time for this year’s redesign – the e-commerce and cloud computing titan made some major redesign announcements on Thursday.
The decision that stands out happens at Alibaba Cloud, the world’s third-largest public cloud infrastructure provider after AWS and Microsoft. Jeff Zhang, former chairman of Alibaba Cloud Intelligence, is stepping down while Daniel Zhang (unrelated), CEO of Alibaba, takes over as interim chairman.
The timing of the restructuring is causing speculation. Just under two weeks ago, Alibaba Cloud’s servers in Hong Kong suffered a severe outage that disrupted many services in the region, including major crypto exchange OKX. The system outage, which lasted up to a day for some customers, made the incident one of the biggest among Chinese cloud providers in recent history.
Jeff has not left but will instead focus his attention on the basic research institute at Alibaba Damo Academy. As one of 29 members of Alibaba Partnerships, a group of exclusive executives with major influence on the company’s direction, Zhang has played a pivotal role since joining two decades ago. On the one hand, he was instrumental in designing the system infrastructure of Taobao, one of the largest online marketplaces in the world.
At Damo, he will continue to lead IoT initiatives and Alibaba’s proprietary chip development team, T-Head, which has taken on new prominence as China navigates escalating tech sanctions. by the United States.
“For the past four years, Jeff has led the Alibaba Cloud Intelligence team to deliver exceptional results in technology innovation and industry influence,” Daniel said in an internal email to staff.
In addition to taking the helm of the cloud business, the CEO will also manage DingTalk, Alibaba’s enterprise communication application which works closely with the cloud unit. As we wrote in 2020:
At its annual summit this week, Alibaba Cloud reiterated its latest strategy to “integrate the cloud into Dingtalk (in Chinese),” its Slack-like work collaboration app.
The tagline suggests the strategic role Alibaba wants Dingtalk to play: an operating system based on Alibaba Cloud, the world’s third-largest infrastructure-as-a-service behind Amazon and Microsoft. It’s a relationship that echoes that between Microsoft 365 and Azure, as Alibaba Cloud President Zhang Jianfeng previously suggested in an interview (in Chinese).
It’s hard to imagine Daniel dedicating himself to the cloud business for the long haul, which is likely why he gets the title of interim president. As Alibaba’s second largest company accounting for 10% of overall revenue in the second quarter, the cloud segment will surely do its utmost to find the next suitable boss.
Whoever succeeds will be no small feat. The cloud arm has been growing slowly in recent quarters as it loses important overseas revenue streams. Alibaba Cloud was once the go-to solution for many Chinese internet companies expanding overseas, but with rising geopolitical tensions, they are turning to overseas providers like AWS to sever ties with China. For example, Alibaba Cloud was reportedly hit hard after TikTok pulled its data from its service.
As the company noted in its own words during its November earnings call:
“Customer revenue from [the] The Internet industry declined by around 18%, mainly due to lower revenue from the main Internet customer who gradually stopped using our overseas cloud service for its international business, education customers in line, as well as slower demand from other customers in the Chinese Internet industry.
Domestically, Alibaba Cloud faces rivalry from nemesis Tencent, which has a stronghold in gaming. It also competes with Huawei and Tianyi, the cloud subsidiary of state-owned telecommunications giant China Telecom, both of which take a lead in supporting government and public infrastructure.