Yahoo announced they’re going to chunk down a cool $1 billion for a fat stake in the Chinese Internet company known as Alibaba. Yahoo’s 40% share in China’s largest ecommerce company and 35% voting rights will put Yahoo in a strong position to grab market share in China.
With China being the growing front for Internet superiority, this makes a big score for Yahoo as competitors Google and Microsoft currently battle over the fate of Dr. Lee.
According to Yahoo’s press release, this combination will make them the only Internet company in China with a leading position in the key growth sectors of business-to-business e-commerce, consumer e-commerce, online payments, communications and search.
The new organization will consist of Alibaba International, Alibaba China, AliPay, Taobao, Yahoo’s China properties that include a Yahoo! China portal, Yahoo Search Technology and 3721. Yahoo will also contribute its interest in 1Pai into Alibaba.
“Yahoo!’s investment underscores our long-term commitment to the Chinese market. We believe the combination of Yahoo! and Alibaba is the best approach for Yahoo! to win in this region,” said Terry Semel, chairman and chief executive officer of Yahoo!. “Together, we will create one of the largest Internet companies in China, and our combined assets will make us the only company that has a leading position in all the key sectors that are driving explosive Internet growth in China such as search, commerce and communications.”
A couple of things of note in this announcement. First, Yahoo will bypass the war going on between Google and Microsoft. That fight is going to be an expensive legal battle for both companies and it will cost them a fair amount of money.
Second, many services offered to the online world are already being offered by Alibaba anyway, this will just expand their offerings. One can only assume Yahoo will follow the doctrines in place by the Chinese government about censoring content in their searches.
Many industry experts saw this deal coming and how it will alter the plans for Google’s and MSN’s China offerings remains to be seen. In any event, this will certainly change the search landscape as China. China has a 100 million Internet users and the number is expected to grow, there may be more than enough there for everyone.
John Stith is a staff writer for Murdok covering technology and business.
