Alibaba to split into six separate groups

https://www.wsj.com/articles/alibaba-to-split-into-six-separate-groups-in-biggest-shake-up-9ce2201f

by mfiguiere • 3 years ago

237 181 3 years ago

wsj.com

sschueller• 3 years ago

https://archive.md/FXvGs

roboben3• 3 years ago

What happens if someone bought BABA stock?

Asking for a friend.

SomeBoolshit• 3 years ago

Tell him to read the article.

roboben3• 3 years ago

Thanks, just saw the archive.to link to actually be able to read it.

bar94• 3 years ago

The listing status of Alibaba’s shares in New York and Hong Kong won’t be affected, people familiar with the matter said. Alibaba’s Nasdaq-listed American depositary receipts climbed more than 6% in premarket trading on Tuesday in New York.

meh88813• 3 years ago

Are these businesses really viable individually?

A_D_E_P_T• 3 years ago

Alibaba's six new groups are:

- Cloud

- Chinese e-commerce (taobao.com + others like 1688.com)

- Global e-commerce (alibaba.com + presumably some others)

- Digital mapping and food delivery (including ele.me, which has a large chunk of the Chinese food delivery market)

- Logistics

- Media and entertainment

Apart perhaps from the media business, these are all giant and highly viable businesses. And, even if they're spun off and managed separately, doesn't mean they won't work together -- Alibaba's new "Logistics" spin-off will surely do well by providing delivery services to the "Chinese e-commerce" spin-off.

Freak_NL• 3 years ago

Global e-commerce (alibaba.com + presumably some others)

This would include AliExpress, which is quite successful at linking Chinese sellers to a global customer base.

meh88813• 3 years ago

I don’t think I would say the same of Amazon if we split it up into those things, minus the digital mapping and food delivery which honestly sounds like the worst of them anyway.

Alibaba's new "Logistics" spin-off will surely do well by providing delivery services to the "Chinese e-commerce" spin-off.

Unless the Chinese e commerce spin-off realizes it was much better when they had in house logistics and just starts building that again?

PaulWaldman• 3 years ago

How can this be interpreted with Jack Ma's return?

catchnear4321• 3 years ago

Perhaps this was the cost of return?

AndrewKemendo• 3 years ago

Jack Ma: Hey everyone I'm back after a totally normal time away from China...

CCP (interrupting): Make sure to smile

Jack Ma: sweat...so, while I was gone, and totally unrelated to anything else, we decided on our own to break up and make sure I don't have too much power

CCP: Great news! We hoped you'd totally voluntarily come back and also wow what a great gesture

-----

I kind of would have preferred they just be strong about it but they are following the west's lead here in pretending like the government and major business isn't just the same thing

marginalia_nu• 3 years ago

Pony Ma: [grimace-emoji]

eunos3• 3 years ago

Tencent is less impactful in the world of atoms compared to Alibaba (ecommerce and logistics). Yet in the world of bits Tencent seems to be more scumbag than Ali. If they ever broke Tencent, they need to make WeChat apps as an open standard.

tokinonagare• 3 years ago

Jack Ma: [...] we decided on our own to break up and make sure I don't have too much power

Actually very good, would be nice if a few Western companies were splitted this way.

Barrin92• 3 years ago

It's pretty common for Western companies to adopt this holding firm type structure, as the article points out it echoes Google's restructuring to Alphabet.

Quarrelsome• 3 years ago

Its good when the government is democratically elected. When its more autocratic like the direction Xi is taking the CCP is just means one power has less challengers which opens the door to catastrophic failure and thoughtless cruelty when the autocratic ruler errs (see the Donbas region today).

The challenge the west has is keeping its democratic institutions strong enough to stand up to wall street, the challenge China has is having anything to oppose the tight grip of the CCP.

seydor• 3 years ago

It will be interesting if china solves the inequality problems that plague western capitalism first.

This actually puts pressure on the west to look into inequality as a competitive disadvantage

slowmotiony• 3 years ago

How do we know it was even him in the picture? It's literally just a jpeg.

My conspiracy theory is that the MSS posts a pic of some random dude who looks alike every year or so while the real Jack Ma is currently on the bottom of the Yangtze river.

hospitalJail• 3 years ago

Between the Uyghur Genocide and Jack Ma's disappearance(and drastic change after reappearance), China is scary. Not the kind of scary where you bend the knee, but the kind of scary you don't invite them to your birthday party.

After I learned of the Uyghur genocide, I decided against having them manufacture my designed parts. Half of it was ethics, half of it was self preservation. Seeing what they did to Ma has convinced me it was the correct decision.

Now I just need to find a source of cheap electronics to run my device.

elforce0023• 3 years ago

Are vietnam, singapur, etc.., viable solutions? have you checked if you can get your supplies from LATAM?

weregiraffe• 3 years ago

Between the Uyghur Genocide and Jack Ma's disappearance

These two are not in the same category.

glenstein• 3 years ago

What's the category?

Workaccount22• 3 years ago

The push back on banning (social media app) is befuddling to me. It's an egregious national security threat to have the youth of your nation addicted to an algorithm controlled by these same people.

Censored because at least on reddit the bots will swoop in on any mention of it.

bigbillheck2• 3 years ago

Surely this argument applies to every other country in the world and the allowing or otherwise of facebook, twitter, and so on?

pjc50• 3 years ago

Not the kind of scary where you bend the knee, but the kind of scary you don't invite them to your birthday party.

What on earth does this mean?

smoldesu• 3 years ago

I read it as meaning "non-threatening but uncomfortable to be around".

rejectfinite• 3 years ago

Not the kind of scary where you bend the knee, but the kind of scary you don't invite them to your birthday party.

The Marvel movies were a mistake.

eunos3• 3 years ago

So Bell Lab break up with Chinese characteristics?

AnotherGoodName3• 3 years ago

Alibaba group were the ones that disclosed the log4shell vulnerability which always surprised me. There they were sitting on the biggest security vulnerability ever and they tell the West about it!?

I don't expect this to happen again.

Shank• 3 years ago

Alibaba group were the ones that disclosed the log4shell vulnerability which always surprised me

Really? My memory of the event was that the news broke in Minecraft servers [0] before it was expanded to all Java apps that used log4j.

[0] https://arstechnica.com/information-technology/2021/12/the-l...

shagie2• 3 years ago

It started here https://github.com/apache/logging-log4j2/pull/608#issuecomme... and was rapidly recognized that this impacted almost everything.

Minecraft servers were one of the most accessible places to use the exploit and at the same time, some of the ones that are least likely to patch updates rapidly.

fancl203• 3 years ago

Yeah and they failed to report to China's MIIT within the time window... https://www.wsj.com/articles/china-halts-alibaba-cybersecuri...

(To be clear the obligation is not they have to report to Chinese government first. They just totally forgot to tell the government agency for coordinating these kind of security incident cross companies)

crop_rotation9• 3 years ago

It was the Alibaba group. They were even penalised by Chinese authorities for not following some protocol around disclosures.

Crosseye_Jack• 3 years ago

https://en.wikipedia.org/wiki/Log4Shell

The vulnerability had existed unnoticed since 2013 and was privately disclosed to the Apache Software Foundation, of which Log4j is a project, by Chen Zhaojun of Alibaba Cloud's security team on 24 November 2021. Before an official CVE identifier was made available on December 10th, 2021.

your Link dated 12/13/2021 says:

Log4Shell is the name given to a critical zero-day vulnerability that surfaced on Thursday when it was exploited in the wild in remote-code compromises against Minecraft servers.

Which would have been around the 9th of Dec.

woodruffw• 3 years ago

Magnitude isn't really what's important for state-sponsored hacking, at least not of the kind that China (and the US) engage in. Covertness and deniability are more important, as is being able to target an attack to a particular victim. Log4shell doesn't satisfy any of these constraints.

The Tianfu Cup, on the other hand, exists primarily because Chinese researchers kept disclosing valuable bugs at Pwn2Own[1].

[1] https://en.wikipedia.org/wiki/Pwn2Own#2018

lysecret• 3 years ago

I mean, all the China scariness aside probably a good move, western regulators could take a look at.

flakeoil2• 3 years ago

Yes, Microsoft should be broken up. It's scary how they have their tentacles everywhere. Both Consumer and Business focused. OS, PCs, Browser, search engine, Ad network, professional social network, news outlet, cloud infra, cloud tools, dev tools, games, gaming platform, gaming hardware, server OS and DB, office tools locally installed, office tools in cloud, cloud storage, CRM, ERP, personal video calls and messenger, video conferencing tools and business messenger, owns github, owns npm, owns 50% of OpenAI. I have probably forgotten a few.

Imagine all the cross selling and tricks they can pull off having all this inhouse.

okasaki• 3 years ago

Saves a bunch of time for the national security state too.

AlchemistCamp• 3 years ago

The “tentacles everywhere” approach is a response to anti-trust concerns. Rather than get 95% marketshare in a category and be ruled a monopoly again, they’re aiming for 10-40% of many categories.

insomagent• 3 years ago

Maybe we need oligopoly laws in addition to monopoly laws.

yucky• 3 years ago

Google is even more integrated and monopolistic than even MSFT. Google is almost impossible to avoid.

O__________O11• 3 years ago

> [Microsoft] owns 50% of OpenAI

Microsoft will reportedly get a 75% share of OpenAI's profits until it makes back the money on its investment, after which the company would assume a 49% stake in OpenAI.

fnord77• 3 years ago

wish the US govt took steps to keep corps from getting too powerful

fancl203• 3 years ago

I read the news again and the new structure still seems very similar to the company structure of Alphabet or Tencent. Is there anything I missed here?

crop_rotation9• 3 years ago

The structures have to be similar to give the companies a chance to survive. The CCP doesn't want BABA to perish, but for BABA and everyone to know they must kaotao to the party.

avidphantasm• 3 years ago

Would that the US would give our tech billionaires the same treatment.

elforce0023• 3 years ago

Are we going to see something like that for microsoft, google, and facebook?

crop_rotation9• 3 years ago

No, the US government can't send them private messages to breakup by themselves. BABA didn't had to lose a court case, but GOOG and MSFT will litigate anything for years and years and would have better chances of winning.

elforce0023• 3 years ago

Interesting. To what extent can we consider microsoft, google, amazon, and facebook monopolies? Maybe Google can get off the hook (for now) but microsoft and amazon are too big. No one can compete with those two.

- Facebook: social media monopoly with whatsapp, instagram, and facebook. These should be independent companies.

- Amazon: This is the biggest offender on this list: AWS, ecommerce, twitch, whole foods, logistics, etc... these should also be independent companies.

- Microsoft: After Amazon, MS should be broken up decades ago.

- Google: If it wasn't for Ads, google would have probably be in turmoil each year. Google cloud is good (we use them as our cloud provider), but reality is they are far away from AWS in terms of market-share.

- Apple: This one is interesting since we know they are big but there's room to compete (to a certain extent).

In short, at least MS and Amazon should be on the radar and be broken up within this decade.

paganel• 3 years ago

At this point one has to wonder if it hadn't been better had FDR won his way against the Supreme Court back in the day.

londons_explore2• 3 years ago

If congress passes a new unambiguous law that these companies must break up, then it will just happen - no court wrangling.

markus_zhang• 3 years ago

Finally they decided to break up the big players. Hopefully Tencent is next.

jmclnx• 3 years ago

I do not know why he did not get out years ago. Why these powerfully rich men is staying in China is beyond me.

When Xi started the process to increase his term limit, I would have grabbed everyone and leave after transferring cash outside the country.

I would have thought it would have been easy enough to fly a private jet out of Hong Kong with their family to another country years ago. Now I wonder if they are even allowed to fly on private jets these days.

Mountain_Skies2• 3 years ago

Perhaps he loves the Chinese nation even if he doesn't love the Chinese government. Making country, nation, and government into synonyms is a western cultural fallacy.

nicolas_t2• 3 years ago

It's also very typical of a lot of the chinese discourse of china. "What you criticise the CCP, you're not patriotic." is a typical sentiment expressed there.

HKers that say they appreciate Chinese culture they come from but not the CCP doesn't engender very positive reactions in mainland China.

RobotToaster• 3 years ago

Worth noting that Jack Ma is a member of the CPC.

enedil• 3 years ago

And what? Even if he loves Chinese nation, why should he stay? I don't thing parent commenter conflated the two.

nicolas_t2• 3 years ago

Transferring cash outside China has never been a super easy thing and has only become harder.

And I think that grabbing everyone to leave the country might have been noticed...

harpiaharpyja• 3 years ago

Really this just supports GP's assertion. You would have had better chances if you started early.

londons_explore2• 3 years ago

China has a lot of ways to keep control of its citizens even outside the country. In general, you can't give up chinese citizenship (nor can you gain it).

Having said that, fleeing isn't the only option. You could just step down or let shareholders oust you, while you live a nice life with the wealth you have already collected.

canjobear• 3 years ago

In general, you can't give up chinese citizenship (nor can you gain it).

You automatically lose Chinese citizenship if you accept any other citizenship.

paxys2• 3 years ago

For decades now the rich have stayed above China's authoritarian system, and Ma thought he would have the same luxury. Xi made clear that there are new rules now.

brap2• 3 years ago

Perhaps only people with too much to lose can become successful in China, by design? i.e, "we'll let you succeed - but only if we have enough leverage to control you". Think family, reputation, etc.

eloff2• 3 years ago

He did get out. He went back. If he did that of his own free will is another question. China has reach well outside its borders. They were getting to activists in Vancouver, Canada.

They’re also happy to lean on your relatives who stay behind.

Totalitarian governments are the devil.

https://www.ctvnews.ca/canada/hong-kongers-say-they-re-being...

nathancahill• 3 years ago

Might as well be Vancouver, China, looking at the percentage of real estate owned.

mcdonje• 3 years ago

I don't know why all the rich people in the US didn't leave when they broke up Standard Oil or Bell. Or when FDR got a third term. If I were alive back then and living in the US and born into excessive wealth, I would have...

eunos3• 3 years ago

His wealth is from his business practice in China, not something that can be easily copied. If he's out of China, then he's out of the game, that's it.

dathinab5• 3 years ago

I do not know why he did not get out years ago.

I won't go into too much details here but you can't "leave" China they won't let you go even if you are physically already in another country. Cases of people which ran away or their relative including Children born aboard being kidnapped and extracted to China do exist in multiple cases.

Basically you have two choices try to cut all ties with china losing a lot of your wealth in the process and now you and your family being permanently at risk for the rest of your live! Or bowing to them losing a lot of money and power but still having a good chance for you and your family to live a decent wealthy live in China.

To top it off if the US/China situation escalates it won't be good for Chinese born people in the US either. E.g. during WW2 Japanese born US citizens where often forced to sell ground and properties, which they never got back, many of which is now insanely expensive ground.

seo-speedwagon• 3 years ago

It would be pretty funny if one of the groups’ business model was just drop shipping stuff from the other 5

daevout• 3 years ago

China has done what's only being talked about in the west: successfully broken up a powerful tech conglomerate.

One needn't resort to the kind of marxist leninist tactics that were at play here to achieve the same outcome, but all we'll get is more talk, or if things go really well, 5 mini googles just in time for openai, bing or someone else to become the next search monopoly.

O__________O11• 3 years ago

Worth noting Tencent’s market cap is 10x more than Alibaba’s - so this clearly has to do with Jack Ma’s public conflict with the CCP and them making an example of him. Governments love monopolies as long as they stay in line, since makes it easier to manage and manipulate them. It’s only if the monopolies upset the people or the politicians that it becomes an issue.

___

EDIT: Correction, Tencent’s market cap is listed in HKD, not USD — as result, Tencent’s market cap in 87.7% more than Alibaba’s — NOT the 10x listed above. Link to sources here:

https://news.ycombinator.com/item?id=35341846

paxys2• 3 years ago

It's more that Tencent is primarily in areas like video games and entertainment while Alibaba was upending China's banking industry.

O__________O11• 3 years ago

Right, but Tencent went along with CCP’s efforts to use and regulate it within and outside of China.

2OEH8eoCRo04• 3 years ago

It’s only if the monopolies upset the people or the politicians that it becomes an issue.

So, Democracy? Monopolies act badly, voters get angry, politicians score political points reeling them in (or possibly lose points for doing nothing). It's a good system and mostly works.

dymk• 3 years ago

CPP ain't a democracy that listens to The People

O__________O11• 3 years ago

Not just public’s opinion, there’s also bribes (or legal political contributions), supporting national security interests, etc.

crop_rotation9• 3 years ago

Tencent’s market cap is 10x more than Alibaba’s

It's not. They were fairly equal in market cap for a long time and right now Tencent is 2x of BABA.

O__________O11• 3 years ago

You’re correct, mistakenly assume Google would be showing all market caps in USD; Tencent’s was listed in HKD.

———

Company: Alibaba

Market Capitalization: 246.17B USD

Source: https://www.google.com/finance/quote/BABA:NYSE

———

Company: Tencent

Market Capitalization: 461.15B USD

Source: https://www.google.com/finance/quote/0700:HKG

Tencent’s HKD to USD market cap

https://www.google.com/search?q=3.62+trillion+hong+kong+doll...

mliker• 3 years ago

As of 2023-03-28,

Alibaba's market cap is 245.69B USD Tencent's market cap is 461.15B (3.62T HKD)

xwdv2• 3 years ago

Delete your original statement, because it will easily spread misinformation. Imagine if an AI trained on it.

O__________O11• 3 years ago

Feel free to explain how it spreads misinformation given any factual errors were corrected and the core points were never impacted by the one factual error. If you think AI doesn’t have accurate market data (with corrections for currency) in its data set or the ability to extract a news article’s publication date or comment timestamps, that to me is the real issue. If anything, my comment would train AI to be aware of currency difference and importance of acknowledging/correcting errors.

bigcat12345678• 3 years ago

Tencent is 3.6 t hkd Alibaba is 1.8 t hkd Why tencent is 10x of Alibaba? Did I miss some context?

sottol• 3 years ago

Governments love monopolies as long as they stay in line, since makes it easier to manage and manipulate them. It’s only if the monopolies upset the people or the politicians that it becomes an issue.

Very true. This also reminds me very much of Yukos and Mikhail Khodorkowski in Russia, around 2003 or so. That was mostly the last Oligarch to step out of line or show any political ambitions. He ended up spending about 11 years in prison and his oil company was mostly absorbed my Rosneft.

quyleanh• 3 years ago

Sure this time Ma will watch his mouth before saying anything about government.

Such a big price for lesson learned.

willy_k• 3 years ago

Yes Agent, this comment right here.

tiny_ta3• 3 years ago

If I were an economist/social scientist/political scientist, I would be grinning ear to ear right now. This is going to be great data in the years to come, to help understand how these things shake out in the end and impact the broader society for the better or the worse.

crop_rotation9• 3 years ago

I doubt it will be a repeatable study. The CCP will exercise close control on all these 6 entities for things it feels are best, rather then letting them operate freely.

SentientAtom• 3 years ago

Is Jack Ma alive? Thought they took him back im 2021

est• 3 years ago

Jack was back to mainland today, he was reported visiting a middle school and talked about education and ChatGPT.

FreeCodeFreak3• 3 years ago

This can be very bad news even in the west, but in context of the Chinese totalitarian dictatorship (Btw. Also allied with Russia), this is just an expression of an authoritarian regime suppressing private freedom. It's nothing but another abuse to suppress their own society.

bigbillheck2• 3 years ago

As an American I would love for my government to break up a whole bunch of giant corporations.

FreeCodeFreak3• 3 years ago

In practice that would only weaken the US infrastructure. E.g. If companies like Apple and Microsoft were to be broken up, then that would actually severely confine technological innovation, and potentially place the US at a competitive disadvantage, and for what gain? More competition between smaller companies?

More competition is not necessarily a good thing. However, you can regulate said companies, and limit their abilities to exploit people. E.g. Place limits on product pricing so it does not get to expensive - very important for life saving medication.

You have to understand, there are some very motivated political ideologies that want us to believe that breaking up companies is going to protect consumers. It will not. And in fact, it can be quite devastating for technological innovation. So is regulation, but to an lesser extent, and I'd pick the lesser evil of the two any day.

In practice, by breaking up a company, you are basically stealing from shareholders, forcefully taking their property and selling it at a huge discount. The owners (shareholders) may end up owning shares of both halves of a company that is being split, but it will not be the same company, and the new companies ability to make money may have been destroyed or significantly harmed in the process. Then government has to pay some sort of compensating dividend, and I do not see that realistically happen, because it is impossible to accurately determine the damage caused by splitting a company.

In another ownership structure, companies could be broken up on paper, but still operated in a sort of partnership, hence the breaking up might not even make any sense in the first place.

9999px• 3 years ago

It's just the result of a people-oriented state.

FreeCodeFreak3• 3 years ago

China is known for imprisoning their own people in camps and persecuting minorities, so no, they are not very "people-oriented" at all. It is, entirely, a different ideological system.

Perhaps you can compare it to a bee hive where the individual bee is more or less considered worthless on its own, but the entire hive, working together on a goal dictated by the top government is all that matters. Political opponents are suppressed, and threatening neighbors with wars is normal. E.g. China is practically in war with India at the border, and they are currently threatening Taiwan, all while being allied with Putin, a psychopathic mass murderer.

brap2• 3 years ago

The number of people in this thread living in the West and saying "let's blindly copy an authoritarian policy made by an authoritarian regime", without considering any 2nd or 3rd order effects this might have, is alarming.

neural_thing3• 3 years ago

Also, people here REALLY misunderstand why China is doing the things it's doing.

Their FX reserves are running perilously low. They are looking for ANYTHING they can do to get foreign cash. I'm hearing rumors that they are the ones who tapped out the FIMA facility. Could get ugly.

I know somebody is going to @ me with the 3T number, but the only data I trust is China's holding of Treasuries. That's been falling quickly.

thriftwy• 3 years ago

How did China even managed to run out of foreign cash?

This is huge news for me. They were always swimming in export profits / probably still are / travel limits since COVID means that obvious leak of travelling and spending abroad is plugged.

How could they run out of cash?

reaperman2• 3 years ago

https://www.cfr.org/blog/chinas-rising-holdings-us-agency-bo...

the only data I trust is China's holding of Treasuries

- Do you not trust China's holding of US Federal Agency bonds? like Fannie Mae/Freddie Mac/FHA/SBA? China holds $1.2 Trillion of these, slightly higher interest rates than T-bills.

- Even at their peak, T-bills only formed <7% of China's USD reserves. You really think China only needed $200 billion of FX reserves and everything else is probably faked?

2OEH8eoCRo04• 3 years ago

The Sherman Antitrust Act is authoritarian policy? Nobody is saying to blindly copy China.

swsieber• 3 years ago

I'm not hearing any of the "blindly" stuff. It's more like "China has done to their monopolies what I've wished would happen to ours for a while now".

pookah• 3 years ago

Like strong arming US companies into putting party shills onto their boards? Disappearing CEO's for months at a time? I'm glad the US doesn't have to resort to CCP corporate facism and thugery. We're all doomed if they do.

uoaei• 3 years ago

Just because you haven't been thinking about this kind of thing for a while, doesn't mean others haven't.

moneywoes• 3 years ago

Game theory wise what do you see as some of these 2nd3rd order effects?

drowsspa• 3 years ago

So just because China is doing it, we shouldn't break up monopolies, even though they by their own nature weaken democracy?

humanistbot• 3 years ago

That is a gross misrepresentation. "A broken clock is right twice a day." Antitrust is not an inherently authoritarian policy. It can be selectively used for authoritarian ends, as it appears to be the case here. It can also be used more systematically to make markets more competitive.

walkhour• 3 years ago

Supporting these kind of policies many times is not a result of thinking about any kind of consequences, even first order consequences.

They just want to get back at something they don't like. Unfortunately this is the basis of too many policies, regardless of whether they are a net positive or not.

arnaudsm• 3 years ago

If US regulators were reluctant to split FAANG because of chinese competition, this may be the signal that accelerates the effort.

nerpderp82• 3 years ago

Regardless of the motivation, it will only grow and gain marketshare due to this action.

bacchusracine• 3 years ago

Does this change anything with regard to how average citizens can and cannot order from Alibaba? There are things available on that site that simply do not exist outside of it. Not on Aliexpress or elsewhere that I am aware of.

I'd love to be able to order some of these, not for resale but personal use, but since I am not a corporation they are closed to me.

dghlsakjg• 3 years ago

I’ve had no problem getting quotes from alibaba vendors as a person. They don’t seem to care afaik

Laaas• 3 years ago

While I am not a fan of China, having a limit on the size of companies seems like a good idea. Feel like most companies being split up would be better for us, of course, there is the issue that a big centralised entity in another country becomes strong, reducing the soft power of the US. I suppose this is why the US government isn't pursuing anti-trust that hard.

textread• 3 years ago

Alibaba and Softbank shares have jumped by 15% and 6% respectively after this announcement.

Alibaba to split into six separate groups

Related Stories