Alibaba, China’s e-commerce giant, will split into six units

New York Times

China’s Alibaba Group said Tuesday that it would become a holding company with six different business groups, in a major reshuffle that signaled the potential breakup of the country’s biggest e-commerce firm.

Alibaba described the restructuring as the “most significant” organizational overhaul in its 24-year history. It said each unit would have its own chief executive and board of directors to allow for quicker decision-making.

The units will be allowed to seek outside capital with an eye toward eventual initial public offerings. Only its China e-commerce unit, Taobao Tmall Commerce Group, will remain a wholly owned Alibaba entity.

Alibaba’s U.S.-listed shares rose more than 14% on Tuesday.

The experience of Alibaba, an internet conglomerate with a variety of businesses that include online shopping and cloud computing, has become a cautionary tale for the cost of challenging China’s ruling Communist Party and the extent of Beijing’s campaign to curb the power of its technology giants. Alibaba’s decision to potentially break up the company into several entities may also ease the government’s concerns about the concentration of power and influence among the country’s web giants.

“Splitting the company into different parts appears compatible with the general desire to avoid antitrust scrutiny, which has been an issue not just for Alibaba but for other companies in China” in recent years, said Graham Webster, the editor-in-chief of the DigiChina Project at the Stanford University Cyber Policy Center.

For now, the government appears to be relaxing its regulatory stronghold on the technology sector after a tumultuous three years – a period marked by the disappearance of Alibaba’s billionaire founder, Jack Ma, from the public eye. He was driven underground after criticizing Chinese regulators in 2020 for stifling innovation at Ant Group, Alibaba’s financial technology sister company.

Once a gregarious and outspoken figure, a symbol of China’s ability to compete globally, Ma has maintained a low profile in recent years, choosing to spend most of his time abroad. The whereabouts of Ma, China’s most famous businessperson, had become a source of intrigue.

He resurfaced in mainland China this week for the first time after a prolonged absence. It is not clear how the timing of Ma’s return affected Alibaba’s announcement. He retired from the company in 2019 but remains one of its largest individual shareholders.

This article originally appeared in The New York Times.