The Alibaba Group announced today that it’s planning to split into 6 different business outfits.
Alibaba is one of the largest tech companies in the world, employing over 200,000 people primarily in Asia but also in the US, UK, and Germany. Alibaba’s flagship online shopping platform – Taobao – has been one of the driving forces behind the social commerce wave in China.
This announcement is an interesting development given that Alibaba has operated as a single entity for over 25 years. Each of the six groups will run a specific aspect of the company’s business: cloud computing, global e-Commerce, local e-Commerce, logistics, media, and food delivery. The separate entities will also report to different boards and seek out individual IPOs or funding on their own. Alibaba Group will effectively become a holding company.
This announcement is not so far-fetched from what Facebook did in 2021 when the company became a Meta subsidiary along with Instagram and WhatsApp. But it’s, all the same, fascinating given that Alibaba has for over 2 decades billed itself as a leading Chinese technology company with global reach.
“This transformation will empower all our businesses to become more agile, enhance decision-making and enable faster responses to market changes,” said the company’s CEO Daniel Zhang in a letter seen by the Wall Street Journal.
Zhang also said that the resources that run the different groups (including data management and human resources) will be split accordingly.