Alibaba, Beijing Fear Microsoft’s Business Tactics

    February 18, 2008
    WebProNews Staff

Look for Jack Ma’s Alibaba to become part of the Microsoft-Yahoo discussions due to Yahoo’s sizable stake in the company.

The essential message comes across as Yahoo, a 39 percent shareholder in Alibaba, faces assimilation by Microsoft. A takeover bid once valued at $44.6 billion, subject to further discussion, weighs on the minds of Yahoo’s partners as much as it does the company’s founders.

But the Reuters report on concerns being raised at Alibaba distracted us from the basic message. Read on:

…the Chinese company is in a very strong position to influence how shares would be transferred to any new owner, said the source, who is close to Alibaba.

The problem is a perception by Beijing authorities that an important Chinese firm could come under the control of Microsoft Corp, which has a reputation of using monopolistic tactics, said the source, who is familiar with a team of bankers and lawyers assembled by Alibaba to review its options.

That’s right. The central Chinese government won’t win any awards for being a democratic model under even the most generous standards (as in non-existent), but they see Microsoft as too controlling.

The position smacks of a blatant double standard. Remember when the big Chinese oil firm, CNOOC, sought control of Unocal in 2005? China’s foreign ministry pitched a fit when they thought the US Congress politicized that “normal commercial” exchange.

Alibaba’s viewpoint sees Microsoft as eventually winning the day. If they are relevant to discussions about the Yahoo acquisition, they should be part of the process. The whole issue of Microsoft controlling a substantial stake in the company should be considered as a normal commercial exchange too, instead of being politicized.