Alibaba has announced a move to fully spin out its cloud business in a historic six-way shake-up, raising speculation about the company’s motivations.
Daniel Zhang, Alibaba’s CEO, made the news by outlining plans to totally privatize Alibaba Cloud. Zhang claimed that they are taking concrete steps to generate value from their businesses and that the board has authorized the Cloud Intelligence Group’s full spin-off. Its goal is to become an independent publicly traded corporation, which will be accomplished by a stock dividend distribution to shareholders.
The move to privatize Alibaba Cloud has fueled discussion about the impact of commercial and political forces. The Chinese government’s growing inspection of private cloud service providers has raised worries. The government has grown wary of privately owned repositories storing sensitive and valuable data, prompting a crackdown on the internet industry.
AliCloud faced regulatory investigation in 2021 for failing to quickly notify authorities of a severe software issue. Furthermore, in 2022, the division was probed for its role in China’s greatest known cybersecurity data leak. As a result of these occurrences, Alibaba Cloud has lost market share to competitors such as Huawei Technologies Co. and state-owned China Mobile Ltd.
Alibaba intends to complete the spin-off within the next 12 months and aims to involve external strategic investors through private financings.
The sources for this piece include an article in DataCenterKnowledge.