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SHANGHAI: New Alibaba Group CEO Eddie Wu has told staff the tech giant’s two main strategic focuses going forward will be “user first” and “AI-driven”, according to an internal letter reviewed by Reuters.

Wu, who sent the letter on Tuesday, his third day in the top job, also said Alibaba would focus on promoting young employees, specifically citing those born after 1985, to form the core of its business management teams within the next four years.

This would help maintain a “start-up mindset” and prevent the company getting “stuck in our old ways”, he said.

The new CEO, one of Alibaba Group’s founders and long-time lieutenant of former chief Jack Ma, is laying out his strategic priorities at a key moment for Alibaba, which is undergoing the biggest organisational restructure of its 24-year history.

Late on Sunday Alibaba also announced that Wu would concurrently serve as CEO of its cloud computing unit, replacing Daniel Zhang.

The news came as a surprise to many, as Zhang had said in June he was stepping away as CEO of Alibaba Group to focus on the cloud division, which is aiming to have an IPO by May 2024.

The Cloud Intelligence Group, valued at $41 billion to $60 billion this year, is among five units Alibaba is spinning off as part of its restructuring.

The cloud unit is Alibaba’s second-biggest revenue source after domestic e-commerce and houses the group’s generative artificial intelligence model, Tongyi Qianwen.

“Over the next decade, the most significant change agent will be the disruptions bought about by AI across all sectors,” Wu said in the letter.

“If we don’t keep up with the changes of the AI era, we will be displaced.”

Alibaba beat analyst expectations in its first-quarter earnings report last month, but its recovery from a two-year regulatory crackdown has been complicated by the dual challenges of rising competition and a slowing Chinese economy.

Economic headwinds have helped drive more domestic e-commerce consumers to low-cost platforms, such as PDD Holdings Pinduoduo and ByteDance’s Douyin, the Chinese version of TikTok, prompting Alibaba’s domestic e-commerce arm to focus on value for money segments.

The cloud unit reported revenue growth of 4% for the quarter, the smallest among the group’s six business units, but analysts estimate it is China’s largest cloud provider with a 34% market share, ahead of Huawei Technologies, Tencent Holdings and Baidu.

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