Microsoft’s Potential Yahoo Buy Could Lose Alibaba

Chinese asset could remove itself from the deal under new law

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Jerry Yang thinks Alibaba represents part of the growth Yahoo will enjoy over the next two years, but it may not be so if Microsoft acquires Yahoo.

The reason for concern comes from a forthcoming antitrust law being enacted on August 1st in China. Like the US FTC and the EU Competition Commission, China will review company mergers for possible monopolistic shenanigans.

With that law comes the possibility Alibaba jumps ship if Microsoft takes over Yahoo, which holds a 40 percent stake in the business. Yahoo purchased that stake for a billion dollars in 2005.

The New York Times said the thinking at Jack Ma’s Alibaba concerns the potential of buying back its Yahoo stake should the takeover happen. China’s new law apparently could enable this; neither Yahoo nor Microsoft is talking about it.

With Alibaba at stake, Microsoft won’t be inclined to boost its offer for Yahoo; why pay more when such a valuable asset could vanish due to Chinese regulatory activity?

Imagine what could happen to Yahoo’s stock if Microsoft decides they want to walk away from the Yahoo deal, if Alibaba’s presence can’t be part of it. That would set the stage for a lot more lawsuits against Yahoo for saying ‘no’ to Microsoft, as Yahoo stock only rose in value with the disclosure of Microsoft’s takeover interest.

Microsoft’s Potential Yahoo Buy Could Lose Alibaba
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  • http://www.businesses.com.pk/ Pakistan Business Man

    The thing is, with just about the entire world reaching for google when searching, what is Microsoft actually going to accomplish by buying Yahoo.

    I mean they say that they are bringing in richer and deeper results, but quite a few times when I searched their Live search, knowing something was there, their search engine couldn’t output the results.

    Google on the contrary took less then a second, and boom, I remembered the name of the sites which I was trying to find.

    Now in the midst of this, what happens if some genius from MIT or Carnegie, comes up with their own version of a relational search algorithm, where are we then.

    IMO, Yahoo doesn’t want to sell and Yang could say heck with it, we’ll run Yahoo the way it’s going, but were not going to sell.

    Who knows.

  • http://www.hyenaonline.com Hyena Cialis

    Yahoo is undervalued and under performing company…

    The only way to maximize its potential is to merge with
    the Behemot Microsoft.

    That’s the reality!

  • http://www.abicana.com Draco volans

    Yahoo is strong in email, discussion groups, news and some other areas. Many users prefere yahoo simply because it is much easier to use in these areas than MSN.

    I have a google acount, a yahoo account and a MSN account, and I definitely prefere the yahoo for email, groups and news.

    I actually prefere MSN only for chatting.

  • http://bitchslappin.net bj

    One has to wonder if Yahoo Execs pushed Chinese Officials into making some noise on this. One also has to wonder why China’s affect on this potential merger was not brought up in the original story of the Buyout offer, since the change to China’s law was made over a year ago and set to take effect in August.

    Yahoo has also been doing a whole lot more with the Open Source Community and Licensing since the buyout offer, which would seem to point to the possibility of the yahoo execs doing everything they can to head this off. Personally, I hope they do. I don’t particularly care for the invasiveness of Yahoo’s tools, but at least the corporate culture is a whole lot more open than Microsoft’s.

    One also has to wonder how many more Chairs Ballmer has Hurled since this announcement, since he was paraphrased as saying he won’t take no for an answer . . .

    Hmm, has anyone compared the timing of Microsoft’s previous offer for Yahoo with the timing of the passing of this law in China????

    If nothing else, the battle has been entertaining.

  • http://www.stuffdone.com Paul Kruger

    Microsoft has never been a "good neighbor" with respect to it’s treatment of other companies or of the general public.  They are about one thing above all others, money.  Cash comes before quality and the more of a monopoly they have in any area, the less they care about quality.


    If they do buy Yahoo it will only fall off in quality for the end users. They shed what was probably the bigest traffic generator at MSN when they kicked out all of the adult groups.  I see much of the same happening to Yahoo if Microsoft takes over.


    It will be great for Google however.

    • Will

      Anything that keeps Google and Microsoft fighting for the crown will benefit the users.  Google needs to bow down to users not users to Google.  Google is evil and needs an attitude adjustment.  They need a strong competitor and they have a reason to be nervous with this buyout, if it happens.

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