Alibaba to Exit Cloud Business After Beijing Undercuts Potential

This post was originally published on Data Center Knowledge

(Bloomberg) — Alibaba Group Holding Ltd.’s surprise move to fully spin out a potentially transformative $12 billion cloud business is stirring speculation about whether the Chinese e-commerce leader bowed to market or political realities.

Chief Executive Officer Daniel Zhang dropped a bombshell Thursday when he unveiled the contours of Alibaba’s historic six-way shakeup for the first time. Included among the listing and financing of a plethora of businesses was a plan to fully relinquish control of the business known as Alibaba Cloud, a once-thriving operation that harbored the potential to supercharge the company the way Amazon Web Services grew to signify Inc.

At the heart of the issue is why Alibaba chose to sever a business some analysts value at upwards of $30 billion, a prime beneficiary of a post-ChatGPT upswell that depends on cloud resources to train next-generation AI models. In doing so, it’s hiving off a unit that comes with historical baggage and its own share of business uncertainty. Alibaba dived as much as 5.9% in Hong Kong Friday, after also reporting disappointing Chinese commerce figures.

China’s most valuable online commerce firm invested tens of billions over more than a decade in the business of

Read the rest of this post, which was originally published on Data Center Knowledge.

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