Alibaba, China’s E-Commerce Giant, Will Split Into 6 Units

The major restructuring, a possible precursor to I.P.O.s, was announced after Jack Ma, its founder, returned to mainland China after a yearlong absence.

China’s Alibaba Group said on Tuesday that it would become a holding company with six different business groups, in a major reshuffle that signaled the potential breakup of the country’s biggest e-commerce firm.

Alibaba described the restructuring as the “most significant” organizational overhaul in its 24-year history. It said each unit would have its own chief executive and board of directors to allow for quicker decision-making.

The units will be allowed to seek outside capital with an eye toward eventual initial public offerings. Only its China e-commerce unit, Taobao Tmall Commerce Group, will remain a wholly owned Alibaba entity.

Alibaba’s U.S.-listed shares rose more than 14 percent on Tuesday.

The experience of Alibaba, an internet conglomerate with a variety of businesses that include online shopping and cloud computing, has become a cautionary tale for the cost of challenging China’s ruling Communist Party and the extent of Beijing’s campaign to curb the power of its technology giants.

Alibaba’s decision to potentially break up the company into several entities may also ease the government’s concerns about the concentration of power and influence among the country’s web giants.

“Splitting the company into different parts appears compatible with the general desire to avoid antitrust scrutiny, which has been an issue not just for Alibaba but for other companies in China” in recent years, said Graham Webster, the editor in chief of the DigiChina Project at the Stanford University Cyber Policy Center.

“I would be surprised if that’s not at least partially in their minds,” he said, adding that there may also be some “business logic” to the restructuring. Mr. Webster noted that splitting Alibaba into different lines of business could insulate the entire enterprise from future government crackdowns on specific sectors.

For now, the government appears to be relaxing its regulatory stronghold on the technology sector after a tumultuous three years — a period marked by the disappearance of Alibaba’s billionaire founder, Jack Ma, from the public eye. He was driven underground after criticizing Chinese regulators in 2020 for stifling innovation at Ant Group, Alibaba’s financial technology sister company.

Once a gregarious and outspoken figure, a symbol of China’s ability to compete globally, Mr. Ma has maintained a low profile in recent years, choosing to spend most of his time abroad. The whereabouts of Mr. Ma, China’s most famous businessman, had become a source of intrigue.

He resurfaced in mainland China this week after a prolonged absence. It is not clear how the timing of Mr. Ma’s return affected Alibaba’s announcement. He retired from the company in 2019 but remains one of its largest individual shareholders.

After Mr. Ma’s remarks in 2020, Chinese officials suspended Ant Group’s plans for an initial public offering. Chinese regulators forced Ant to register as a financial holding company and to separate its payment app from its financial services. The public listing never took place. Subsequently, regulators fined Alibaba $2.8 billion for abusing its dominance.

In January, Ant Group said Mr. Ma had planned to relinquish control of the company. Around the same time, the top Communist Party official at China’s central bank said the so-called rectification campaign into the biggest technology companies was “basically complete.”

Mr. Ma’s disappearance illustrated how business interests had taken a back seat to the priorities of the state under Xi Jinping, China’s top leader, and how even its most powerful companies were not immune from scrutiny. But as China’s economy struggles to regain momentum after relaxing its restrictive “zero Covid” policies, Beijing is trying to convince business leaders that it is focused on jump-starting the economy.

By allowing different businesses to spin off and possibly go public, Alibaba said, the move is “designed to unlock shareholder value.” The company’s stock is down roughly 70 percent since it became a target in the technology sector crackdown.

In a letter to employees, Daniel Zhang, Alibaba’s chief executive, said the holding company structure made sense for Alibaba because the natures of the six business groups were different, with various stages of development and disparate needs. Alibaba did not explain why Taobao Tmall, the China commerce business that accounts for the vast majority of its revenue, will remain wholly owned.

“If you do not embrace change, you will become rigid, and if you do not change yourself, you will be defeated by the times,” Mr. Zhang wrote.

In addition to being the head of the holding company, Mr. Zhang said, he will serve as chief executive of the Cloud Intelligence Group, the company’s cloud computing and artificial intelligence division.

The other business groups are Global Digital Commerce Group, its overseas e-commerce businesses; Local Services Group for its mapping and delivery services; Cainiao Smart Logistics, its logistics and supply chain management arm; and Digital Media and Entertainment Group.

The move and the stated rationale behind it are similar to Google’s decision in 2015 to create a holding company under the Alphabet umbrella to allow its business ventures to operate more independently.

While China cracked down on its tech firms, other governments were also scrutinizing giants of the digital economy. In the United States, the federal government has sued Google and Meta, Facebook’s parent company, arguing that they have abused or maintained monopoly power. The European Union is preparing to carry out a sweeping antitrust law focused on American tech platforms.

James A. Lewis, a senior vice president at the Center for Strategic and International Studies, said the effective breakup of Alibaba could influence efforts to check the power of tech giants in the United States and Europe.

“One thing to ask is, What’s the precedent here for the U.S.?” he said. “There’s this regulatory interplay — what one party does affects the other two.”