Daniel Zhang, CEO and chairman of Alibaba Group, will step down from leading the company's cloud business. This move came as a surprise as he had taken charge of this vertical just two months ago, In June, Alibaba Group had announced that Zhang was departing as chairman and CEO to focus on the cloud intelligence unit.

Group CEO Eddie Wu will assume control of the Chinese conglomerate's cloud business.  

"The board of our company expresses its deepest appreciation to Zhang for his contributions to Alibaba group over the past 16 years," Alibaba said in a statement.

Reuters reported that this vertical, which is China's largest cloud provider, will be spun off from Alibaba as part of its restructuring process, which it announced this March. This rehaul will see each unit have its own CEO and board. The cloud business was a significant component of this reform.

In May, Alibaba stated that it planned to finish the public offering of its cloud business within 12 months. Yesterday, it announced that it would continue with the spin-off with a different management team.

"Daniel has expressed his wish to transition away from his role as chairman and CEO of Cloud Intelligence Group," the company said in the letter that was signed by Joseph Tsai, an Alibaba co-founder who also took over the chairman role from Zhang as planned on Sunday.

The letter added that Zhang would contribute to Alibaba by channelling his expertise differently. The company would also invest $1 billion in a technology fund that Zhang would establish.

The former CEO was also given the "emeritus" title, a first in Alibaba's history.

Zhang, a former accountant who joined Alibaba in 2007, is credited with creating the company's yearly "Singles Day" retail extravaganza. In 2015, he was named CEO, and succeeded Jack Ma, Alibaba's founder in 2019.