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Former Alibaba Group Holding chairman and CEO Daniel Zhang Yong is stepping down as head of the e-commerce giant's cloud division, a move that comes as a complete surprise on the same day he was to hand over the reins of the parent company to co-founder Joseph C. Tsai.

Alibaba's new CEO Eddie Wu Yongming, who like Tsai assumed his new role Sunday, also took over from Zhang as acting chairman and CEO of Alibaba Cloud Intelligence Group on the same day, an Alibaba spokesman said.

Alibaba had announced in June that the 51-year-old Zhang would step down as Alibaba CEO and chairman, but would stay on as head of the cloud unit that would be corporatized.

Shares of Alibaba Group fell 2.8 percent, the highest drop since Aug. 18. The stock gained 1.7 percent this year and rose 3.5 percent since June 20, when the group first announced its plans with Alibaba Cloud.

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