Alibaba Cloud, the cloud arm of Chinese e-commerce giant Alibaba Group, is set to downsize its workforce by 7% as part of preparations for a spinoff. The move is part of broader measures to streamline the cloud division into a separate company within a year, which could pursue an initial public offering. The company plans to offer severance packages to affected staff and transfer some workers to other parts of its business empire, but the transfer scheme is not guaranteed. Alibaba CEO Daniel Zhang believes that giving up control of the cloud arm will unlock its potential and enable it to attract more significant growth potential as an independent entity.