Credit：Visual China

Alibaba was said to be soon lay off 25,000 employees and other Chinese internet companies also making preparation for the similar move. “Several friends forwarded me the news, which was false and I have already dismissed it back in May,” posted Yan Qiao, head of public relations and vice president, at her personal WeChat account. “Rumors about layoff are coming one after another, but false information is fake indeed,” The Paper and other Chinese news media outlets later cited the insider at Alibaba.

The rumor Yan Qiao mentioned in May led to Alibaba’s announcement of a massive hiring plan. The Hangzhou-based company was said to axe 25,000 staff in total, affecting jobs at the Taobao & Tmall Group, which include its core e-commerce retail businesses such as Taobao, Tmall, the logistic arm Cainiao, the Local Services Group, the Cloud Intelligence Group and the Digital Media and Entertainment Group. Days after varieties of the rumor speading, Alibaba said it would hire a total of 15,000 people this year for all the six business groups, including more than 3,000 university graduates from on-campus recruitment. It also noted that it has thousands of openings every day in its recruiting system, as a proof that it is still hiring.

Though the recent rumor seems similar to the one swirled months ago, Alibaba is facing more complicated external environment and arrived at a crossroads when tech giants caught between escalating U.S.-China tensions.

In a report about the financial results for the third quarter released last week, Alibaba disclosed it decided not to proceed with a full spinoff of Cloud Intelligence Group as the recent expansion U.S. export restrictions on advanced computing chips has created uncertainties for the unit’s prospects. The Chinese cloud computing leader believes its spinoff may not achieve the intended effect of shareholder value enhancement.

Alibaba warned the new export control “may materially and adversely affect” the cloud unit’s ability to offer products and services and to perform under existing contracts, thereby negatively affecting the company’s results of operations and financial condition. “These new restrictions may also affect our businesses more generally by limiting our ability to upgrade our technological capabilities,” the company said.

While dropping the spinoff plan for Cloud Intelligence Group, including cloud, artificial intelligence (AI), DingTalk and other businesses, Alibaba reiterated its commitment to AI. It said it will focus on "developing a sustainable growth model for the cloud unit under the fluid circumstances".

“Circumstances have changed”, so the company now focus on how to grow the cloud business, and a big part of it is “to provide cash to make investments, because in the AI-driven world, develop a full-blown business based on a very networked and highly scaled infrastructure, it requires investment,” Alibaba Chairman Joseph Tsai told analysts at an earnings call Thursday.

Tsai and Alibaba CEO Eddie Wu said the company needed a strategy “reset”. In his first public remarks as chief executive, Wu said the widening U.S. restrictions on chips export to China has forced his company to reconsider its breakup plan. 

Alibaba also disclosed the plan for initial public offering (IPO) of its logistics arm Freshippo (Hema) has been put on hold as it evaluates market conditions and other factors would contribute to a successful transaction to boost shareholder value.

As Alibaba released the financial report, its cofounder Jack Ma disclosed funds under his family trust, plans to sell about 5 million American Depository Shares (ADSs) of Alibaba each, for a total of about $871 million. Ma’s sales plan raised more concern about Alibaba’s outlook. Ma’s office last Friday said the billionaire is firmly bullish on Alibaba, and will also firmly hold its shares even though the company is currently highly undervalued. 

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