The history of Alibaba in recent years resembles a pendulum swinging between absolute autonomy and iron-fisted central control. Just two years ago, the Chinese e-commerce giant announced the historic "1+6+N" plan, a radical restructuring aimed at breaking the empire into six independent business units, each with its own board and the potential for an independent IPO. However, as we move through June 2026, the picture has changed dramatically. Alibaba is returning to an era of high centralization, a move many analysts describe as a "strategic retreat" in the face of a world changing faster than its leadership anticipated.
The Failure of Decentralization and the Rise of Competition
The "1+6+N" model was designed to make Alibaba more agile, allowing units like Cloud Intelligence, Cainiao (logistics), and Local Services to operate as startups. The hope was that liberation from group bureaucracy would spark innovation. In practice, however, decentralization created internal silos. While Alibaba struggled to find its footing in the new structure, competitors like PDD Holdings (owner of Pinduoduo and Temu) and ByteDance (Douyin) were eating away at its market share with aggressive low-cost tactics and algorithmic superiority.
The need for a unified response became imperative. Pinduoduo, in particular, managed to surpass Alibaba in market capitalization at certain periods, sending shockwaves through the Hangzhou headquarters. Leadership realized that fragmenting their forces made them vulnerable. The return to central control is not merely an administrative decision but a battle for survival to maintain dominance in Chinese commerce.
The Role of Eddie Wu and the "Iron Fist"
Eddie Wu, who took the reins as Group CEO, has become the architect of this new centralized era. In a departure from the previous regime, Wu now simultaneously holds the positions of Group CEO, CEO of Cloud Intelligence, and CEO of Taobao and Tmall Group. This accumulation of power is unprecedented in the company's history and signals the end of autonomy for individual departments.
According to reports from 36Kr, the new strategy focuses on "synergy above all." Wu believes that Cloud and E-commerce must function as a single body. The isolation of the Cloud division, which was originally intended for a full spin-off, was canceled. The logic is simple: Artificial Intelligence (AI) requires massive resources and data that only a unified Alibaba can provide efficiently. Central management now has the first and last word on AI infrastructure investments, ensuring that every part of the company serves the same strategic goal.
AI as the Binding Fabric
In today's market, technology is no longer a supporting tool but the heart of the business. Alibaba aims to transform into an "AI-driven" company. To achieve this, integration of user data from across all its platforms is required. In the old decentralized model, data sharing between Taobao and Cainiao was often slow and complicated due to bureaucratic hurdles between "independent" units.
With re-centralization, Alibaba can deploy its Large Language Models (LLMs) across its entire ecosystem simultaneously. From automated customer service to demand forecasting in warehouses, AI acts as the binding fabric that justifies the return to the centralized model. The company is investing billions in GPU clusters and domestic chip development, an effort that would be impossible if each unit had to fund its own research and development.
Challenges and the Future of the Empire
The return to centralization is not without risks. Alibaba risks reinstating the cumbersome bureaucracy it sought to avoid. Furthermore, the Chinese government keeps a close watch on tech giants. While the split was seen as a move to appease anti-monopoly regulators, re-centralization may again raise questions about the company's market power.
However, for investors, this move offers a sense of stability. Eddie Wu's clear leadership and focus on profitability through technological superiority seem to be bearing fruit in recent financial reports. Alibaba is no longer trying to be everything to everyone through independent subsidiaries, but a single, powerful player using its scale as a weapon. The bet is whether this "old-new" structure can defeat the agility of its younger competitors in China's digital economy.
