Alibaba Divides Kingdom Into Six Pieces

Alibaba, cloud, security

Alibaba Group is splitting into six pieces with plans to take these new businesses public.

The Chinese eCommerce company said Tuesday (March 28) it was undergoing the biggest revamp in its nearly 25-year history, dividing into a number of new businesses as its country’s government steps back from a broad regulatory crackdown, Reuters reported.

The report said the new units are: Cloud Intelligence Group; Taobao Tmall Commerce Group; Local Services Group; Cainiao Smart Logistics Group; Global Digital Commerce Group; and Digital Media and Entertainment Group.

“The original intention and fundamental purpose of this reform is to make our organization more agile, shorten decision making links and respond faster,” CEO Daniel Zhang said in a letter to Alibaba workers, per the report.

Zhang will stay on as CEO of Alibaba and also serve as CEO of Cloud Intelligence Group. Five of the six groups will have their own CEOs and boards, as well as the ability to raise outside funds and go after an initial public offering (IPO), according to the report.

The sole exception is Taobao Tmall Commerce Group, which handles Alibaba’s China commerce businesses and will stay a wholly-owned part of Alibaba Group. According to Reuters, Zhang’s letter did not mention specific job cuts, but said the company plans to “lighten and thin” middle- and back-office operations.

The news follows reports Monday (March 27) that Jack Ma, founder of Alibaba, had returned to China following a two-year absence from the country.

Earlier this year, Ma had agreed to give up control of Ant Group, a Chinese FinTech and Alibaba affiliate.

China spent much of the last two years cracking down on the country’s biggest tech companies, adopting regulations to curb the amount of power these firms have. That included rules governing the way companies use algorithms to make online recommendations, investment regulations and rules on monopolization.

But as PYMNTS has reported, there have been signs of late that China could be easing off its efforts to pressure Big Tech.

Alibaba’s plan to divide itself comes one month after the company reported slower growth due to the ongoing impact of the COVID pandemic.

“We delivered a solid quarter despite softer demand, supply chain and logistics disruptions due to impact of changes in COVID-19 measures,” Zhang said in February.

Among the setbacks noted in the company’s earnings report was a drop in the gross market value (GMV) on products from Alibaba’s Tao Bao and Tmall businesses due to weaker demand, ongoing competition and a supply chain hiccups following a surge in COVID-19 cases.