Alibaba Group Holding will sharpen its strategic focuses on two main themes – “user first” and “artificial intelligence (AI)-driven” – as the Chinese tech giant grapples with growing competition and a shifting internet landscape, according to new group CEO Eddie Wu Yongming.
“As traditional internet models become increasingly homogeneous and face the competitive pressures of saturation, new technologies such as AI are emerging as the new engine of global business growth,” Wu, who assumed his new role on Sunday, wrote in an internal letter sent to employees on Tuesday morning.
“We will recalibrate our operations around these two core strategies and reshape our business priorities,” he said.
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As part of its business transformation, Alibaba, owner of the South China Morning Post, would strengthen its strategic investments in three areas: technology-driven internet platforms, AI-driven tech businesses and global commerce networks, Wu said.
Alibaba’s shares extended a decline on Tuesday amid depressed market sentiment, dropping 1.53 per cent to HK$86.7 as of 11:30am.
Daniel Zhang Yong (centre) has handed over the reins of Alibaba to chairman Joe Tsai (right) and CEO Eddie Wu Yongming (left). Photo: Handout alt=Daniel Zhang Yong (centre) has handed over the reins of Alibaba to chairman Joe Tsai (right) and CEO Eddie Wu Yongming (left). Photo: Handout>
The letter comes two days after Wu took over as acting chairman and CEO of Alibaba Cloud Intelligence Group following the surprise exit of former group chairman and CEO Daniel Zhang Yong. Until Sunday, Zhang had been expected to stay on to head the cloud business after handing the chairmanship of the parent company to co-founder Joe Tsai.
The leadership change may increase coordination between the cloud unit and the group’s other operations, which is critical for key products such as Alibaba Cloud’s large AI language model Tongyi Qianwen, launched in April, according to analysts.
“The trends we are seeing now in turn prove the strategic importance of Alibaba Cloud Intelligence,” Chen Duan, director of the Digital Economy Integration Innovation Development Center at the Central University of Finance and Economics, said on Monday.
CEO Wu said the company must search for ways to integrate AI innovations into its various businesses.
“Each of our businesses generates massive numbers of use cases,” Wu wrote. “Therefore, we must transform these use cases into applications for AI technology, driving breakthrough user experience and business models through technology innovation. If we don’t keep up with the changes of the AI era, we will be displaced.”
Alibaba has been undergoing a historic restructuring that was announced in March. Under the plan, the firm aims to reorganise its sprawling business empire into six independently-run entities, including the cloud unit, each potentially seeking its own fundraising avenues through IPOs.
In his letter, Wu said the Hangzhou-based company is committed to supporting the career advancement of younger employees to assume leadership roles. “Within the next four years, we will promote those born after 1985 and [the] 1990s to form the core of our business management teams,” he wrote.
“I firmly believe that as long as we get back to our start-up mindset, not dwell on the past and not get stuck in our old ways, Alibaba will be rewarded with enormous growth and create even greater value in the era of AI,” Wu said.
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