Alibaba Group CEO Eddie Wu Reveals Strategic Priorities in Internal Letter
SHANGHAI, Sept 12 (Reuters) – New Alibaba Group CEO Eddie Wu has outlined the company’s main strategic focuses in an internal letter reviewed by Reuters. Wu, who took over as CEO recently, emphasized that Alibaba’s future direction will prioritize “user first” and “AI-driven” approaches.
In the letter sent on Tuesday, Wu also highlighted the importance of promoting young employees, particularly those born after 1985, to form the core of Alibaba’s business management teams within the next four years. This initiative aims to maintain a “start-up mindset” and prevent the company from becoming stagnant.
As one of Alibaba Group’s founders and a long-time lieutenant of former chief Jack Ma, Wu’s strategic priorities come at a crucial time for the company. Alibaba is currently undergoing the largest organizational restructure in its 24-year history.
In a surprising move, Alibaba announced late on Sunday that Wu would concurrently serve as CEO of its cloud computing unit, replacing Daniel Zhang. This decision comes after Zhang had previously stated in June that he would step away as CEO of Alibaba Group to focus on the cloud division, which plans to have an IPO by May 2024.
Alibaba’s cloud unit, known as the Cloud Intelligence Group, holds significant value, estimated to be between $41 billion and $60 billion this year. It is one of the five units being spun off by Alibaba as part of its restructuring efforts. The cloud unit is the company’s second-biggest revenue source after domestic e-commerce and is home to Alibaba’s generative artificial intelligence model, Tongyi Qianwen.
Wu stated in the internal letter, “Over the next decade, the most significant change agent will be the disruptions brought about by AI across all sectors. If we don’t keep up with the changes of the AI era, we will be displaced.”
Although Alibaba surpassed analyst expectations in its first-quarter earnings report, its recovery from a two-year regulatory crackdown has been complicated by rising competition and a slowing Chinese economy. Economic headwinds have led more domestic e-commerce consumers to low-cost platforms, prompting Alibaba’s domestic e-commerce arm to focus on value for money segments.
While Alibaba’s cloud unit reported a 4% revenue growth for the quarter, the smallest among the group’s six business units, analysts estimate that it holds a 34% market share, making it China’s largest cloud provider ahead of Huawei Technologies, Tencent Holdings, and Baidu.
Reporting by Casey Hall; Editing by Gerry Doyle and Stephen Coates