February 7, 2023

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Alibaba CEO to oversee cloud arm after major server outage • Eureka News Now

When former Alibaba CEO Jack Ma passed the torch to Daniel Zhang, he instituted a system that rotates executives on a regular basis to ensure the company remains agile in the fast-changing internet space. It’s time for this year’s makeover – the e-commerce and cloud-computing titan announced some major restructuring on Thursday.

The standout decision comes from Alibaba Cloud, the third largest public cloud infrastructure provider in the world, behind only AWS and Microsoft. Jeff Zhang, former president of Alibaba Cloud Intelligence, is stepping down while Daniel Zhang (independent), CEO of Alibaba, takes over as acting president.

The timing of the restructuring is causing speculation. Almost two weeks ago, Alibaba Cloud servers in Hong Kong suffered a severe outage that crippled 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 largest among Chinese cloud providers in recent history.

Jeff is not gone but will instead focus on Alibaba’s basic research institute Damo Academy. As one of the 29 members of Alibaba Partnerships, a group of exclusive executives with deep influence on the company’s direction, Zhang has played a pivotal role since joining it two decades ago. On the one hand, he was instrumental in designing the system infrastructure for Taobao, one of the world’s largest online marketplaces.

At Damo, he will remain responsible for IoT initiatives and Alibaba’s proprietary chip development team, T-Head, which has taken on new prominence as China deals with escalating US tech sanctions

“For the past four years, Jeff has led the Alibaba Cloud Intelligence team to deliver outstanding results in terms of technology innovation and industry impact,” Daniel said in an internal email to employees.

In addition to leading the cloud business, the CEO will also oversee DingTalk, Alibaba’s enterprise communications app, which works closely with the cloud entity. As we wrote in 2020:

At its annual summit this week, Alibaba Cloud reiterated its latest strategy to “integrate the cloud with Dingtalk (in Chinese),” its work collaboration app that’s analogous to Slack.

The tagline hints at the strategic role Alibaba expects from Dingtalk: an operating system built on top of Alibaba Cloud, the world’s third-largest infrastructure as a service behind Amazon and Microsoft. It’s a relationship that mirrors that between Microsoft 365 and Azure, as Alibaba Cloud President Zhang Jianfeng hinted at earlier in an interview (in Chinese).

It’s hard to imagine Daniel dedicating himself to the cloud business long-term, which is likely why he’s getting the title of acting president. As Alibaba’s second-largest business, accounting for 10% of total revenue in the second quarter, the cloud segment will certainly be scrambling to find the next suitable boss.

Whoever the successor is, it will be no small matter. The cloud space has seen sluggish growth in recent quarters as it loses key revenue streams overseas. Alibaba Cloud was once the preferred solution for many Chinese internet companies expanding overseas, but as geopolitical tensions mount, they are turning to foreign providers like AWS to sever ties with China. One example is that Alibaba Cloud reportedly took a big hit after TikTok removed its data from its service.

As the company noted in its own words on its November conference call:

“Income from customers in [the] The internet industry declined by about 18%, mainly due to declining revenue from the leading internet customer, which has gradually stopped using our overseas cloud service for its international business, online education customers, and slowing demand from other customers in China’s internet industry. “

Domestically, Alibaba Cloud faces competition from its nemesis Tencent, which is a gaming stronghold. It also competes with Huawei and Tianyi, the cloud arm of state telecom giant China Telecom, both of which have a lead in supporting state and public infrastructure.