Alibaba’s New CEO Elevates AI to Top Priority in Revamp

Alibaba Group Holding Ltd. will put artificial intelligence and user experience at the top of its priorities, as its new leadership seeks to reclaim customers and market share in a fiercely competitive arena.

(Bloomberg) — Alibaba Group Holding Ltd. will put artificial intelligence and user experience at the top of its priorities, as its new leadership seeks to reclaim customers and market share in a fiercely competitive arena.

Chief Executive Officer Eddie Wu laid out his vision in a memo to staff on Tuesday for the first time since officially taking over from veteran Daniel Zhang. Wu stressed Alibaba must adjust its approach to go AI-first, while not forgetting the hundreds of millions of users that helped create one of China’s largest corporations. In recent years, however, that lead has come under attack from new rivals in social media such as ByteDance Ltd. while the likes of Baidu Inc. have invested heavily in AI.

“Over the next decade, the most significant change agent will be the disruptions brought about by AI across all sectors,” Wu said in his note, reviewed by Bloomberg News. “If we don’t keep up with the changes of the AI era, we will be displaced.” 

The Hangzhou-based ecommerce leader will reinforce strategic investments in the areas of AI-driven tech businesses, internet platforms and its global commerce network, Wu said. Like all of China’s top tech companies, Alibaba has this year made catching up and leading in AI a top priority, and Wu’s comments underline that commitment.

Alibaba’s CEO transition comes as the company navigates fiercer competition from up-and-coming rivals coupled with mounting economic headwinds. While recovering from a two-year-long tech crackdown imposed by Beijing, it continues to grapple with uncertainty.

Zhang unexpectedly quit over the weekend, having only months earlier accepted the role of steering the key Cloud Intelligence Group. That departure raised questions about the ongoing restructuring now spearheaded by Wu and Chairman Joe Tsai.

“We will recalibrate our operations around these two core strategies and reshape our business priorities,” Wu said.

Read more: Alibaba’s Ex-CEO Quits as Jack Ma’s Lieutenants Take Helm

What Bloomberg Intelligence Says

The unexpected departure of Alibaba’s cloud-unit CEO and chairman Daniel Zhang within two months of his appointment raises the likelihood that the business’s new partners will exert greater influence on strategic cloud decisions in future. 

— Catherine Lim and Trini Tan, BI analysts

Wu and Tsai, two of the company’s earliest employees, are longtime close confidants of co-founder Jack Ma and taking over at a critical juncture. After weathering some of the worst blows from China’s tech crackdown, the ecommerce leader has to secure its top spot against competitors like Inc. and upstarts like ByteDance while executing a complex plan to split into six major business units.

Among them, the cloud division is seen as one of the biggest potential growth drivers, should Alibaba be able to capture a large share of the market for providing AI infrastructure and services. Its efforts to raise fresh funds are taking a while — the company put a Hong Kong initial public offering of its Freshippo grocery chain temporarily on hold due to the expected valuation, Bloomberg News reported.

Alibaba joined a global race this year to stake out a spot in the emergent field of AI, considered critical to advancing not just tech companies but national strategic imperatives. It was not among those who secured the first batch of regulatory approvals for offering generative AI services in China, though it has made a splash with integrations of its ChatGPT-like model into its meeting and messaging apps.

“Who is going to run Alibaba Cloud is now the single most important growth question for Alibaba,” said Jeffrey Towson, a partner at TechMoat Consulting. The company has said it will continue the process to independently spin off the cloud unit, which is separately seeking to raise as much as 20 billion yuan ($2.7 billion), with potential backers including Chinese state enterprises.

Read more: Alibaba Turns to Little-Known Coder to Continue Jack Ma’s Legacy

(Updates with Wu’s comments on AI from the third paragraph)

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