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Alibaba CEO Elevates AI to Key Priority in Group Revamp Plan

Alibaba CEO Elevates AI to Key Priority in Group Revamp Plan

Leave a Comment / Artificial Intellegence, News, Tech News / By

Alibaba Group Holding Ltd, one of China’s tech giants, is embarking on a strategic transformation that places artificial intelligence (AI) and user experience at the forefront of its priorities. 

Alibaba CEO Elevates AI to Key Priority in Group Revamp Plan
Image Source: techwireasia.com

This bold move comes as the company faces intensified competition and economic challenges in a rapidly evolving market. The newly appointed CEO, Eddie Wu, articulated his vision for the company in a memo to employees, marking a significant shift in Alibaba’s approach. Wu emphasized the need to pivot towards an “AI-first” strategy while remaining mindful of the hundreds of millions of users who contributed to the company’s immense success.

“We will recalibrate our operations around these two core strategies and reshape our business priorities,” Wu stated in his memo. This renewed focus on AI is in response to mounting competition from emerging rivals like ByteDance Ltd in the realm of social media and significant AI investments made by companies like Baidu Inc. Alibaba aims to reinforce its investments in AI-driven tech businesses, internet platforms, and its global commerce network, aligning with the broader trend of Chinese tech companies prioritizing AI.

Alibaba’s strategic shift is taking place against a backdrop of fierce competition and domestic economic challenges. The company is slowly recovering from a two-year-long tech crackdown imposed by Beijing, and the unexpected departure of former CEO Daniel Zhang, who had recently accepted the role of steering the key Cloud Intelligence Group, signals a changing landscape within the organization.

Analysts suggest that the departure of Zhang may lead to greater influence for the new leadership team, composed of Eddie Wu and group chairman Joe Tsai. Wu and Tsai, both long-time associates of co-founder Jack Ma, are taking the reins at a pivotal moment. Alibaba must not only defend its top position against competitors like JD.com Inc. but also navigate a complex plan to split into six major business units.

Among these divisions, the cloud unit is seen as a significant potential growth driver, particularly in the AI infrastructure and services sector. Alibaba is actively seeking fresh funds, with plans for a Hong Kong initial public offering of its Freshippo grocery chain temporarily on hold due to valuation concerns.

Also Read: G-20 Broadens Debate on AI Risks and Mulls Global Oversight

Alibaba’s entry into the global AI race aligns with the broader importance of AI in tech companies and national strategic objectives. While the company did not secure initial regulatory approvals for offering generative AI services in China, it has made notable strides with the integration of AI models like ChatGPT into its meeting and messaging apps.

Jeffrey Towson, a partner at TechMoat Consulting, emphasized the significance of the cloud division, stating, “Who is going to run Alibaba Cloud is now the single most important growth question for Alibaba.” The company remains committed to independently spinning off the cloud unit, which seeks to raise substantial funding, potentially involving Chinese state enterprises.

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Alibaba says it does not expect any material impact from the $2.75 billion antitrust fine.

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China’s biggest business conglomerate, Alibaba Group is not expecting any material impact in business and from merchants, said Daniel Zhang, CEO of the company. Alibaba Group was charged a fine of $2.75 billion for its powerful market dominance in the nation. The company is going through a giant turmoil and disturbance with the Chinese government since last year.

In October 2020, Alibaba Group’s founder Jack Ma openly criticized the Chinese regulatory system. And since then Alibaba Group has been put under strict scrutiny and faced antitrust charges. Alibaba Group has significantly improved the economic system of China through its growing and flourishing business, but the open criticism against the Chinese government is coming with a heavy price.

New Initiatives by Alibaba

Since the company has gone through strict investigations since last year, the regulatory authority will have a strong vigilance. Apart from paying the $2.75 billion antitrust fine, the company is introducing new measures to lower the entry barriers and business costs that are constantly faced by any existing or new merchants on its platform. High cost for new business is an obstacle that needs to be softened to get them a better start and opportunity. Zhang revealed the measures to be taken to lower business costs for merchants in an online conference.

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Image Source: techzine.eu

Alibaba’s executives have made a statement that though the company has paid a huge amount of new antitrust fine and that new regulatory measures are to be followed by the company, it believes that the company has overall support from the government (Reuters). Joe Tsai, executive vice-chairman of Alibaba Group said that the government is affirmative of the business model of Alibaba.

The company executives further said that they don’t have any fundamental flaw with their business model as a platform company. The new measures will hopefully bring the turbulence between Alibaba group and the Chinese government into balance. But, it is also a major concern if anyone else criticizes the Chinese regulatory system has to go through the same strict scrutiny.

Shares Bounce

Alibaba’s share has been going down and lagging behind the overall emerging economy for some time in the past. Everbright Sun Hung Kai analyst Kenny Ng has said that now that Alibaba group is paying the penalty fee the uncertainty faced by Alibaba Group in the market will reduce. The antitrust fine along with the regulatory measures that are imposed on the company is expected to bring back Alibaba’s stock price and it will once again regain control in the market.

The antitrust fine that has been enforced on Alibaba Group is one of the highest ever antitrust penalties not only in China but across the globe. Along with the $2.75 billion penalties, the State Administration for Market Regulation (SAMR) has ordered the company to make thorough rectification in order to strengthen internal compliance and protect consumer rights (Reuters). Big conglomerates like Alibaba Group often face criticism both from the government and the public due to establishing a great amount of control in the market.

Another similar example is the Australian government enforcing a law that made Facebook and Google make paid deals with local media companies of Australia. On the bright side, the government is trying to support the local media companies and in the case of Alibaba, consumer rights and internal compliance.

The new measures will likely reduce the revenue growth of Alibaba as a further expansion in the market share will be restricted. Alibaba will also face reduced profit margins in order to upgrade products and services. The company has also constrained the merchants to sell through any other platforms since 2015. This violates China’s anti-monopoly law as the free circulation of goods is hindered.

Exclusivity Issues

Alibaba will be giving the penalty and along with that, it has accepted to ensure compliance and determination. Tsai has said that apart from reviewing the company’s mergers and acquisitions so far the company doesn’t expect any further investigation. He also mentioned that apart from that he doesn’t know of any other anti-monopoly related investigation.

Alibaba Seeks to Split Shares to Eight Ahead of a Reported $20B HK Listing

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Alibaba, the biggest eCommerce giant from China, is all set for its IPO listing, which the company has filed in Hong Kong. The IPO may take place in Q3 this year, and it is expected that it may raise up to $20 billion, biggest in Hong Kong after 2010.

Alibaba
Image Source: yahoo.com

Reportedly, Alibaba has proposed to split its one ordinary share into eightfold, in order to raise more funds. The company’s single ordinary share stands at 4 billion, and dividing one to eight will make it $32 billion.

Alibaba will be proposing the idea at its annual general meeting to be held on July 15, in Hong Kong. Here, the investors will be asked to vote for in favour or against the proposal, as they would want to. And, if the proposal gets the winning votes, the company will carry out the spilt by July 2020.

“The Board of Directors is proposing the Share Subdivision to increase the flexibility for the Company in future capital market activities. Among other reasons, the one-to-eight share subdivision will increase the number of shares available for issuance at a lower per share price, and the Board of Directors believes that this will increase flexibility in the Company’s capital raising activities, including the issuance of new shares,” stated Alibaba in the filing,explaining the reason behind the splitting up of share.

According to the reports, the company’s board is already in favour of the proposal and just waiting for the investors to poll. The reports also suggest that Alibaba has already submitted its papers for IPO.

The company went for an IPO in 2014 in the U.S. citing the lack of flexibility, as one of the reasons to not to go for Hong Kong for the listing. It was one of the biggest IPOs and had raised $20 billion at that time. But almost two years ago Hong Kong made some relaxation in its listing rules, such that most of the Chinese companies, now, are seeking for filing IPOs in Hong Kong.

Alibaba Smashes its own Last Year’s Single’s Day Sales Record

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Amazon and Flipkart broke their own previous records of sales in the past festive season sales held before Diwali. But, with the 10th annual Chinese shopping bonanza Singles’ Day, the Chinese internet business giant Alibaba group has made e-commerce history, after it generated a record $30.7 billion in only 24 hours.

Alibaba
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The biggest sales day of China celebrated on 11/11, recorded a 1 billion sale in the first 1 minute and 25 seconds. Alibaba’s Single’s day sale aka the double 11, is the biggest e-commerce sale in the world. On the 11th of November, as soon as the sale started, at midnight, people were buying things from milk powder to iPhones on the website.

Alibaba.com is the biggest dominating e-commerce marketplace, in China, and it is also planning to expand to other countries as well. The Single’s sale is a month-long event that peaks on November 11, and this year it has surpassed its own record of last year’s sale. Last year, it had earned $24 billion in just short of 16 hours. Despite the highest sale this year, the growth rate fell from 39 per cent to 27 per cent, by the end of the day.

Almost ten years ago, the Alibaba group started the Single’s Day sale as a novelty student holiday to celebrate being single and treat themselves through retail therapy. But, in the past ten years, it has become China’s biggest shopping festive season sale. Although most of the Chinese public did not show much interest in the 2018’s Single’s Day sale, Alibaba was still able to surpass the total earnings of Black Friday and Cyber Monday sales (2017) combined.

In 2015, Jack Ma the founder of Alibaba Group had shown an interest in making the Single’s Day sale open at a global level, and also, organised the first non-Chinese Single’s Day in Russia, tiny Hong Kong and the US, last year. The sale mostly included the purchase of mobile phones, wool coats and knitted sweaters. This year, the sale was also organised in South Korea, U.S. and Japan, where the purchase of the same items has been recorded.

Daniel Zhang to Replace Jack Ma as the Chairman of Alibaba Next Year

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Alibaba
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On last Friday, the Chinese billionaire Jack Ma announced his retirement from the position of the chairman of Alibaba. He is going to serve as the chairman of the company till 10 September 2019 and will stay a member of the board until 2020. Jack Ma is only 53 and wants to devote his time to Philanthropy. At the age of 53, he is the only Chinese billionaire who has taken such a decision.

Jack Ma founded Alibaba in 1999, as a business-to-business marketplace. Soon, he expanded the business, to obtain a $420 billion profit, within a few years, making Alibaba as a consumer based platform. He also tried his hands in cloud computing, digital media, and other industries, including the payment gateway AliPay. His success story inspires everyone and he is referred to as ‘Teacher Ma’, in China. His decision has shaken the whole world, but he has got a plan for himself. Jack Ma is going to stay as a lifetime partner of the Alibaba Partnership and will continue working with his philanthropic organisation, the Jack Ma Foundation.

Jack Ma had already decided to retire from his post, a long time ago. Almost a decade ago, he had asked his team about what they will do without him. Now when he is stepping down from his position, the current CEO of the company Daniel Zhang is going to replace Jack Ma, to hold the position of the chairman of the company.

Daniel Zhang joined as the CEO of Alibaba, in 2015, and since then, Alibaba has seen consistent and sustainable growth, for 13 consecutive quarters. On this Jack Ma said, “This transition demonstrates that Alibaba has stepped up to the next level of corporate governance from a company that relies on individuals, to one built on systems of organizational excellence and a culture of talent development”.

Snapdeal Story: How a deals website became top eCommerce platform of India

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Two best friends having common interest in food and maths from Delhi Public School started an offline coupons business which later turned into one of the biggest eCommerce companies of India. The CEO Kunal Bahl (alumni Wharton School, US) and COO Rohit Bansal (IIT Delhi alumni) joined hands to create Snapdeal.

Kunal Bahl, Snapdeal
Kunal Bahl, Snapdeal, Image Credit: Wikimedia.

Back in 2007 when Kunak Bahl’s US visa got rejected and was asked to return to India, he along with Rohit Bansal who was working for CapitalOne in India, decided to work together and do something different.  Kunal while studying in US did 3 different jobs to make up for his monthly expenditures. It is there where he started using food coupons so that he could get a discount and mitigate his expenses with only two jobs. This is what he along with Rohit planned to start in India.

Moneysaver to Snapdeal
They started their entrepreneurial journey in December 2006 from MoneySaver. The business model had no technology involved and was pretty simple. Snapdeal (then MoneySaver) would  get attractive deals from the restaurants, hotels, saloons etc. on the promise of getting them more customers. These coupons were printed in a discount book which they would sell to  customers.

It was a simple business model but they had a hard time getting those deals and coupons. It wasn’t easy to convince businesses to offer coupons as well as customers to buy those booklets. Not many people were aware of this coupon model in India.

As soon as a they started this business they were at a stage where they had only 20,000 Indian Rupees ($300) in their company bank account with current liabilities to the tune of 500,000 Rupees ($7000). They had to pay salaries and other dues from their personal savings and ended up only in Rs. 50,000 ($700) in their personal bank accounts in total.

They did many experiments including community coupon mailing where they would get attractive deals from the hotels, restaurants, spas, saloons etc and mail those to the community around. “It was a total waste”, says Kunal Bahl as the mailing infrastructure in India was very bad. Slowly things picked up and Snapdeal went online in 2010 with initial investment from Vani Kola’s venture capital firm.

Pivoting from deals to eCommerce 
The company was generating  good revenues and was on right track. They acquired Grabbon in 2011. On suggestion of some of the merchants involved in deal business with Snapdeal, Kunal and Rohit checked out Alibaba.com. Inspired by the success of Alibaba, Kunal Bahl took a firm decision to pivot from deals business to eCommerce. This was a tough and risky decision. However, this decision turned out to be so good that today Snapdeal is among top 3 eCommerce websites in India.

They created a marketplace for small merchants and industries so that they could directly connect with the millions of customers online. This eCommerce model was not applied by Flipkart (at that time) as it used its own huge inventory to sell and deliver products. However, later Flipkart too joined the marketplace bandwagon.

snapdeal-2011
Snapdeal in 2011

To sustain growth and compete with companies like Flipkart they raised further investments of $45 million from Nexus ventures and Bessemer venture partners. They also received a $50 million investment from from E-bay and other existing partners.

E-commerce to M-commerce
Kunal Bahl believes in constant innovation and growth. Looking at the changing user behavior and rapidly increasing mobile and internet penetration, Snapdeal created a mobile application that could work smoothly even on 2g connection. Idea was to get 50% of their orders from the mobile application.  Mobile application gave much needed push by increasing the orders, 80% of which coming only from mobile app.

With 30 million products from around 300K sellers with a reach of 6,000 towns and cities across the country, Snapdeal’s YOY growth today stands at 600%. Snapdeal counts Ratan Tata, Alibaba, SoftBank Corp, IndoUS Ventures, Intel Capital, Nexus Ventures, eBay, Kalaari Capital, Temasek Holdings etc. as their investors. Snapdeal also acquired FreeCharge, the online recharge and payment wallet in an equity deal in 2015.