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Alibaba Pulls Plug on Cloud Unit Spin-Off Over US Chip Curbs

The e-commerce outfit had unveiled plans in March to list its cloud business as part of the biggest restructuring in its 24-year history

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Poor market conditions have killed Alibaba's plan to split into six units. The group now says it will buy the 36% of shares it does not own in its Cainiao logistics unit. This image shows the tech giant's head office in Beijing (Reuters).


Alibaba Group pulled the plug on plans to spin-off its cloud business on Thursday, blaming expanding US chip tech export curbs for creating “uncertainties”.

The announcement came alongside in-line second-quarter revenue from the Chinese e-commerce group, which in March had unveiled plans to carve out the cloud business as part of the biggest restructuring in its 24-year history. Alibaba’s US-listed shares were down 8.4% in premarket trading.

The company also put on hold plans for an initial public offering of its Freshippo groceries business but said it would prepare external fundraising for its international digital commerce group arm. Alibaba’s logistics division, Cainiao, applied to list in Hong Kong in September.

“The recent expansion of US restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group,” Alibaba said.


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Alibaba’s former group CEO Daniel Zhang abruptly quit just two months after concentrating his focus on cloud computing.

The company then appointed Eddie Wu, one of Alibaba Group’s co-founders and long-time lieutenant of former chief Jack Ma, as both CEO of Alibaba and the cloud business.

Analysts had in March estimated the cloud division could be worth between $41-60 billlion but had warned that its listing could attract scrutiny from both Chinese and overseas regulators due to the reams of data it manages.

Regulatory filings also revealed on Thursday that Ma’s family trust plans to sell 10 million American Depository Shares of Alibaba Group Holdings for about $871 million.

Alibaba reported second-quarter revenue of 224.79 billion yuan ($31.01 billion), in line with the 224.32 billion expected by analysts, LSEG data showed.

China’s economic recovery has been uneven. While the industrial and the retail sectors have performed better than expected, the crisis-hit property sector has weighed on consumer confidence.

Customer management revenue from Alibaba’s commerce retail, which tracks how much money merchants provide Alibaba for placements and promotions, grew 3% year-on-year.

Alibaba asked merchants to price aggressively during the country’s Singles Day festival taking on competitors such as Douyin and PDD Holdings’ Pinduoduo which have been selling lower-cost products year-round.

Alibaba International Digital Commerce (AIDC), a business that includes platforms such as Lazada and AliExpress, however, reported a 53% rise in revenues, with retail revenue up 73% year-on-year. 


  • Reuters with additional editing by Sean O’Meara


Read more:

Alibaba Break-Up Gets Underway With Cainiao Listing Move

Alibaba Stock Slips On Daniel Zhang’s Sudden Cloud Unit Exit

Alibaba, Tencent Shares Rise as China Tech Crackdown Nears End

China’s Alibaba Approves Spinoff of Cloud Computing Business



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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