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Alibaba bets on AI with plans to spin off Cloud business as separate company

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By Danielle Long | Acting APAC Editor

May 19, 2023 | 3 min read

Alibaba has revealed its cloud division - which includes its generative AI product Tongyi Qianwen - will be the first company to become a separate, publicly traded company following the e-commerce giant's restructure.

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Alibaba revenues increase as e-commerce giant reveals spin off of Cloud business / Source: www.alibabagroup.com

The announcement came as the e-commerce giant reported its quarterly results revealing a 2% increase in revenues to RMB208,200 million (US$30,316m), however, the company failed to reach market expectations.

Daniel Zhang, chairman and chief executive officer of Alibaba Group, said, “In an increasingly complex world, we have proactively transformed our organization to strengthen the competitiveness of our businesses through greater independence to address the evolving needs of different customers and capture new opportunities.

“We are taking concrete steps towards unlocking value from our businesses and are pleased to announce that our board has approved a full spin-off of the Cloud Intelligence Group via a stock dividend distribution to shareholders, with intention for it to become an independent publicly listed company."

Analysts welcomed the move to spin-off Alibaba Cloud, given the immense growth potential of Artificial intelligence. Alibaba revealed its ChatGPT-style generative AI tool Tongyi Qianwen earlier this year.

Alibaba also announced plans to raise money from outside investors for its international digital commerce business, which includes Lazada and AliExpress, as well as IPO plans for other sections of the business.

Toby Xu, chief financial officer of Alibaba Group, said, “We are delighted to share that our board has approved the process to start external financing for Alibaba International Digital Commerce Business Group; exploration of IPO for Cainiao Smart Logistics Group; and execution of IPO for Freshippo.”

While Alibaba's local retail orders declined for the quarter, the company reported strong growth in March on its Taobao and Tmall platforms, indicating the beginnings of a recovery for the e-commerce giant.

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