Eddie Wu to replace Daniel Zhang as Alibaba CEO.

The Chinese multinational tech company Alibaba Group Holding Limited (HKG: 9988) has announced that co-founder Eddie Wu will take over as CEO from Daniel Zhang. The company made this surprise announcement to allow Zhang to focus on Alibaba Cloud.

In an internal memo sent to staff, current CEO Zhang emphasized the need to focus completely on the company’s Cloud business. He stated that cloud computing is an integral part of today’s tech landscape, especially as the AI boom continues:

“As everyone is well aware, the development of core technologies such as cloud computing, big data, and AI will lead to a tremendous transformation of our society and is of utmost strategic significance.”

Since its inception, Wu has taken on several roles at the Chinese tech giant. He was the company’s first tech head and later became Alipay and Taobao’s chief technology officer. Wu also founded the venture capital firm Vision Plus Capital, which invests in startups focused on digital healthcare and advanced technology.

The management restructuring will also promote current executive vice chairman and co-founder Joseph Tsai to chairman. The executives will start their new roles on September 10.

New Alibaba CEO and Management Restructuring

In March, Alibaba announced that it would split the company into six units. The announcement was quickly considered pivotal by the general market, especially as Alibaba specified that each unit could pursue an independent IPO. In a statement, Zhang said the split would provide the much-needed focus each arm of the business needs. He also said it would help with decision-making, allowing each group to respond independently to changes in the market.

Other units besides the Cloud Intelligence Group are Taobao Tmall Commerce Group, Global Digital Commerce Group, and the Local Services Group. The list also includes Cainiao Smart Logistics and the Digital Media and Entertainment Group. Following a complete spinoff, each unit would have independent boards of directors and CEOs.

Alibaba stock responded to the announcement, climbing over 9% in US pre-market trading.

Speaking about ensuring undivided attention to the company’s cloud business, Zhang added in the internal memo:

“Cloud Intelligence Group is now full speed ahead on its spin-off plans, and we are approaching a crucial stage of the process, so it is the right time for me to dedicate my full attention and time to the business.”

Zhang has been Alibaba’s CEO since co-founder Jack Ma stepped down in 2015.

Company Layoff

Last month, blockchain reported that Alibaba plans to reduce its staff count by 7%. According to unnamed sources, the company conceived the move in preparation for spinning off Alibaba’s cloud division. Alibaba has already begun notifying affected staff and compensating them with severance packages. In addition, there are unconfirmed plans that the company will transfer some staff to other divisions of the company. As of March, Alibaba’s total headcount was more than 235,000.