Alibaba backtracks on cloud division split amid global uncertainties

Alibaba Group has cancelled its plans to spin-off its cloud division due to uncertainties from US exports on AI chips.

The Chinese e-commerce giant announced the split in March, which would have restructured the company into six separate businesses. However, the Cloud Intelligence Unit which focuses mostly on AI and cloud research, will no longer be sectioned off into a separate business.

Citing that the planned business changes would not enhance shareholder value as expected, Alibaba stated in earnings documents: “The recent expansion of US restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group.”

Selling shares in the cloud division was estimated to be worth between $41 and $60 billion, but would have been heavily regulated in the US and China. The cloud unit will still continue to operate, but not as a separate company.

CEO Daniel Zhang, who called the cloud unit a “no brainer” earlier this year, will be quitting the company in September.