Alibaba's Split Sparks Layoff Concerns, CEO Zhang Authority Weakens As He Failed To Boost Share Price

Alibaba Group Holding Limited's BABA latest business restructuring sparks layoff fears among employees.

March 28 reports suggested Alibaba will reorganize its businesses into six independently run entities: Cloud Intelligence Group, e-commerce under Taobao-Tmall, Cainiao's smart logistics operations, Local Services group, Global Digital Business Group, and the Digital Media and Entertainment Group.

Each business unit will have to face the tests of market forces themselves, including the possibility of seeking their initial public offerings (IPOs).

The shift from Alibaba's centralized structure sparked concerns among some of its nearly 240,000 employees after it reduced its headcount by about 20,000 in 2022, Nikkei Asia reports.

The restructuring triggered concerns about if the company is abandoning its yearslong 'central platform' strategy and if there will be substantial layoffs in the central platform, said a senior manager from Alibaba.

Alibaba's restructuring in 2021 moves saw a shift away from CEO Daniel Zhang's centralized approach. Trudy Dai, one of the company's original members and an Alibaba founder Jack Ma student, took charge of a new China digital commerce team in early 2021, weakening Zhang's influence.

Alibaba's restructuring slashed Zhang's powers, who faced flak for failing to boost the share price. After the restructuring, Alibaba Group will follow a holding company management model overseen by Zhang.

While remaining Chair and CEO of Alibaba Group, Zhang will also be the CEO of the Cloud Intelligence Group.

Dai will lead Alibaba's main revenue driver Taobao Tmall Commerce Group. Executive Jiang Fan will become the CEO of the Global Digital Commerce Group, which spans the Southeast Asian-focused Lazada, AliExpress, Trendyol, Daraz, and Alibaba.com.

Price Action: BABA shares traded lower by 1.18% at $97.15 premarket on the last check Wednesday.