Shares of Alibaba Group Holding Limited (NYSE: BABA) plunged -2.29% in the early trading hours Monday following the abrupt resignation of CEO Daniel Zhang as head of the China-based tech giant’s cloud computing division.
The move comes as part of a broader leadership transition within the tech giant, as the company had already announced that Zhang would cede the position of group chair to co-founder Joseph Tsai. In addition, the role of the group chief executive would be passed on to Eddie Yongming Wu.
In March, Alibaba Group Holding Limited (NYSE: BABA) revealed plans to split its business empire into six separate companies, each set to list independently.
Zhang, who has been Alibaba’s CEO for eight years, was expected to continue leading the company’s cloud business into a planned spin-off. However, Wu will now take the helm of the cloud division, one of China’s largest by market share.
Alibaba has confirmed its plan to spin off Alibaba Cloud Intelligence Group with a separate management team. Joseph Tsai and Eddie Wu, the close associates of billionaire co-founder Jack Ma, took over Zhang’s roles as chairman and CEO on Sunday.
Zhang had taken over as Alibaba’s CEO in 2015, succeeding co-founder Jack Ma. His tenure had been marked by challenges, including the Covid-19 pandemic and increased regulatory scrutiny on the internet sector. Beijing had fined Alibaba $2.8 billion for anti-competitive practices and market dominance abuse.
Rivals like ByteDance and Pinduoduo have also posed challenges in Alibaba’s core domestic e-commerce business.
Joseph Tsai, the incoming chairman, acknowledged Daniel Zhang’s leadership in a letter to employees. He wrote,
“After taking the helm as chair four years ago, Daniel confronted myriad challenges, including the Covid-19 pandemic and dramatic changes in the business environment. Yet, with his steady hand, Alibaba navigated and overcame challenges with grace and fortitude.”
Tsai also announced that Alibaba would invest $1 billion in a new technology fund founded by Daniel Zhang.