Alibaba splits itself into six separate companies

Chinese e-commerce and tech giant Alibaba is splitting itself into six separate companies. According to the e-commerce and tech giant, this split would allow it to respond better to changes in the market. It should also enable the companies to innovate independently faster in their respective market and industry segments.

In a blog on its website, Alibaba states that the split into six different entities is the largest organizational change the company has made in its 24-year history. The structural change is intended to enhance the company’s ability to respond to market demand while achieving further growth.

Six separate business groups

More specifically, the company is divided into six separate business groups. These are the Cloud Intelligence Group, the Taobao Tmall Commerce Group, the Local Services Group, Cainiao Smart Logistics, the Global Digital Commerce Group and the Digital Media and Entertainment Group.

Each entity, except for the Taobao Tmall Commerce Group, which remains wholly owned by Alibaba, will have its own CEO at the helm. These CEOs will have full responsibility for the ins and outs of these subsidiaries but will continue to report to the e-commerce and tech giant’s current CEO Daniel Zhang. Zhang will also act as CEO of the Cloud Intelligence Group.

The six new separate Alibaba companies may also raise capital independently outside the parent company. An IPO for a subsidiary is also among the possibilities.

Cloud activities to CI Group

The Cloud Intelligence Group will house Alibaba’s hyperscale and other cloud activities. These include the public cloud environment, Alibaba Cloud, the collaboration platform DingTalk and various AI activities.

The popular e-commerce platform AliExpress will fall under the Global Digital Commerce Group.

End to a troubled period

The breakup of Alibaba appears to end a period of the turmoil surrounding the e-commerce and tech giant. This arose after the Chinese Communist Party prevented an IPO of Alibaba’s own financial services provider Ant Group and founder Jack Ma was sidelined.

The implemented split into six separate companies of the e-commerce and tech conglomerate weakens Alibaba’s dominant (economic) position. Which is exactly what the Chinese government wants.