Hong Kong, Sep 11 (IANS): In a surprise development, former Alibaba Group Chairman and CEO Daniel Zhang has stepped down as head of the e-commerce giant's cloud division, the media reported on Monday.

His resignation from the Cloud unit came as he was scheduled to hand the reins of the parent company to co-founder Joe Tsai, reports the South China Morning Post.

The news led to shares of Alibaba Group slipping 3 per cent at the close of trading in Hong Kong -- touted as the biggest setback since August 18.

“Alibaba’s new CEO Eddie Wu Yongming has also taken over for Zhang as acting chairman and CEO of Alibaba Cloud Intelligence Group on the same day,” the report said, quoting an Alibaba spokesperson.

Alibaba “will continue to execute its previously announced plan to spin off Alibaba Cloud Intelligence Group under a separate management team to be appointed”, the spokesperson added.

Alibaba announced in June that 51-year-old Zhang would resign as Alibaba CEO and chairman.

However, he was likely to stay on as head of the cloud unit “given the importance of Alibaba Cloud Intelligence Group as it progresses towards a full spin-off”.

Zhang took over as Alibaba CEO in 2015 and as chairman in 2019.

Chinese internet giant Alibaba is making significant job cuts in its Cloud unit, reportedly around 7 per cent of its workforce, as it plans separate IPOs for its various business groups.

Earlier, the Chinese tech giant said it was planning to split the company into six business units, and each unit will explore fundraising or IPOs (initial public offerings).

The six units include the Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group.

Each business unit will be led by its own CEO and board of directors.