Yahoo, Alibaba End Dispute, Look to Negotiate 'Outstanding Issues'

By Beecher Tuttle May 16, 2011

Yahoo and Alibaba are making amends following a very public dispute regarding a controversial ownership transfer of one of the Chinese Internet giant's most profitable websites.

The two technology firms made a united stand on Sunday, less than a week after trading public barbs in the media. Yahoo, which maintains a 43 percent stake in Alibaba, said last week that the Chinese firm transferred ownership of its Alipay online-payment business to another company without informing Yahoo or its board.

Alibaba spun-off the website to a company owned by chief executive Jack Ma in August of last year to comply with various Chinese restrictions. However, Yahoo said last week in a statement that it didn't learn of the transfer until March 31.

The news sent Yahoo shares spiraling downwards, based on the perception that its piece of Alibaba is now less valuable without one of its most important assets. Alibaba disagreed with claims, noting that it had informed Yahoo of the transfer during a July 2009 meeting. Ma told shareholders at a meeting in Hong Kong that the transfer was “100 percent legal and 100 percent transparent.”

Yahoo and Alibaba tried to put the bad blood behind them on Sunday with a joint statement.

“Alibaba Group, and its major stockholders are engaged in and committed to productive negotiations to resolve the outstanding issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible,” the statement said, in its entirety.

The two tech giants have had a rocky relationship ever since Yahoo made its initial investment in Alibaba more than six years ago. Previous battles have concerned Alibaba's management of the Yahoo China website and its desire to buy back its stake from the American company, according to the Wall Street Journal.

Yahoo's net profit dropped 28 percent in the first quarter of 2011, while income increased by 37 percent. As of Friday, Yahoo shares were down 11 percent since Yahoo's acknowledgment of the transfer.

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Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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