- Alibaba Group Holding Ltd. reversed plans to spin off its $11 billion cloud business due to escalating US-China technological dominance tensions.
- US restrictions on chip sales to China led Alibaba to rethink breaking up its empire, prompting the company to suspend the cloud business spinoff and the listing of its popular grocery arm, Freshippo.
- The reversal caused Alibaba’s shares to plummet by 9.1% in New York trading, wiping out over $20 billion in market value, marking its largest drop in more than a year.
- Alibaba is attempting a comeback from the pandemic, recovering from a tech industry crackdown in China, and striving to regain lost market share against competitors like PDD Holdings Inc. and state-backed cloud services.
- The company aims to focus on investing in the AI-driven world, with its cloud unit hosting half of China’s generative AI firms and serving about 80% of the country’s tech companies, while grappling with US sanctions impacting chip supplies and a tepid consumer economy.