Neither executive was found to be actually involved in the fraud, but the company found a significant increase in claims against particular sellers over the last year.

In a statement, Alibaba said it "confirmed that Mr. Wei and Mr. Lee and other members of senior management were not involved in any of the activities that led to the claims by buyers against fraudulent suppliers and management made good faith efforts to address the problem," the company said in a statement."However, our board has accepted Mr. Wei and Mr. Lee’s wish that they take responsibility for the systemic break-down in our company’s culture of integrity." (Via Dow Jones Newswires/Wall Street Journal)

Jonathan Lu, who is the CEO of Alibaba Group’s Taobao, will now run both Alibaba.com and Taobao.com. He said customer growth and robust long-term revenue are both expected.

Last month, Alibaba announced plans to build a network of warehouses across China, and drive major investment in logistics in that country, with the aim of allowing merchants to meet growing domestic consumption.

To be fair, little is known about the situation, and it could have been someone at Microsoft who pulled the plug.  The comments of one Microsoft representative hint that a corporate memo didn’t exactly go around, however.

Owen Fletcher reported, "Pilot cooperation between Microsoft Corp.’s Bing search engine and Alibaba Group search website Etao has ended, a spokeswoman for a Microsoft joint venture in China said Monday."

Then Fletcher continued, "The spokeswoman for Shanghai MSN Network Communications Technology Co., a Microsoft joint venture that operates Bing in China, said she was unsure when the cooperation ended and called it ‘uncertain’ whether it would be restored."

That’s less than encouraging news for Microsoft supporters, since a different representative labeled China "the most important strategic market for Microsoft" in late 2009, and Steve Ballmer didn’t back down during the Google hacking brouhaha.

On the bright side, Bing remains in beta in China, so it’s not as if Microsoft has already put lots of time and energy into making the venture succeed.

"It’s clear that logistics is a crucial link in the e-commerce eco-system and in order for Chinese entrepreneurs to reach their future growth goals, this sector needs to develop rapidly in China. It’s also clear that everyone involved in this sector needs to work together to accomplish this," said Alibaba Chairman and CEO Jack Ma. "Hopefully within 10 years’ time, anyone placing an order online from anywhere in China will receive their goods within eight hours, allowing for the virtual urbanization of every village across China. In order to achieve this, we will need to establish a modern, 21st century logistics network."

Alibaba and its financing partners will commit between US$3.01 billion and $4.52 billion to the initiative, and hopes to spark a grand total of over 15.05 billion in investment from other partners within the e-commerce ecosystem. 

 "Creating a network of warehouse facilities is a key tactic in our strategy to resolve the bottleneck facing the logistics industry in China," said Zhang Wei, Alibaba SVP and head of the company’s strategic investment team.

"In the other areas of the logistic industry, Alibaba Group will mainly participate through investments aimed at helping our working partners to accelerate their own growth," added Wei. "We very much encourage participation in the logistics industry from members of the investment community. We will work with everyone in an open, dynamic and win-win environment to achieve this important goal of ensuring Chinese merchants are able to get their products to customers as quickly and efficiently as possible."

The company says usage of its warehouse facilities will be a service available to all, including partners in the logistics industry, Taobao (a Chinese shopping site) sellers, and independent B2C websites.

Owen Fletcher wrote earlier today, "In a breakdown of Chinese online advertising market share, Beijing research firm Analysys International says Alibaba has overtaken Google for second place behind Baidu thanks in large part to its online shopping unit Taobao."

Then Fletcher continued, "Alibaba now owns a 9.3% market share and the number two spot in China’s online ad market, according to Analysys International (Word doc).  Meanwhile, Analysys says, Google’s share fell 2 percentage points from the second quarter, when it held the number-two spot, to 8.9% in the third quarter."

For its part, Baidu ended the third quarter with a market share of 30.1 percent.

Google wasn’t much luckier in the search market, either as its market share fell from 24.2 percent to 21.6 percent while Baidu’s share rose to 73.0 percent.

That’s bad news for the search giant, which has by and large begun to play by China’s rules since it backed down on its threat to leave the country.  The attraction of 1.3 billion potential users was huge, to be sure, but if Google compromised its morals and fails to make much money, the situation becomes lose-lose.

Guardian reports that Apple has refused to allow its iPhone to be included in the UK’s green ranking system, which gives phones a rating of zero to five based on their environmental footprint.

As you may have heard, Google unveiled a new feature in Gmail today that allows users to make and receive phone calls. In addition to this, Google will be setting up phone booths on college campuses and in airports. Danny Sullivan at Search Engine Land shares a video looking at the inside of the phone booth and talking to the product marketing manager about it:

According to PaidContent, Alibaba has acquired eBay auction management provider Auctiva. It recently acquired a similar service in Vendio.

Nick Bilton at the New York Times has an interesting profile of a startup called Stipple, which aims to tag the web’s images. It lets publishers add tags to parts of an image with info about its contents and related links. Launch partners include Six Apart, Jive Records and E.W. Scripps.

Ian Sheer at the Wall Street Journal has an interesting piece about online coupons and how they’re getting smarter. "Among the new approaches: computer programs to better target consumers with personalized deals and staff on the ground to help merchants," he writes.

ReadWriteWeb points to a video of Apple SVP of software engineering, Bertrand Serlet, who talks about using Apple’s private APIs.

According to Guardian, Facebook is now being valued at over $33 billion as investors try to secure a stake in it. Facebook shares are changing hands for up to $76 each, the publication reports. Still, it doesn’t look like there will be an IPO anytime soon.

Ad firm Specificmedia is being sued amid accusations that it is re-creating deleted cookies, according to Wired’s Epicenter.

Jeffrey A. Trachtenberg at the WSJ reports that Amazon has lost a big e-book deal with literary agent Andrew Wylie. This comes as the company also announced that its new Kindles are selling faster than any previous models.

Through the acquisition, Alibaba is gaining access to over 80,000 targeted small businesses in the U.S. and can direct them to Alibaba’s own Aliexpress wholesale transaction platform.

Chris Dawson at e-commerce commentary site TameBay makes an interesting point:

"The acquisition will also give Alibaba a real insight into eBay and Amazon sales from the Vendio merchants. They’ll be able to mine the data to see exactly what’s selling and for what price from those 80,000 merchants.

I’m not sure who will be least pleased at the acquisition from a data perspective – Vendio customers or eBay, but one thing is for sure – it’s a good deal for Alibaba.

"At Alibaba.com, our goal is to make it easier for our customers around the world to do business by providing solutions that increase margins, productivity and competitiveness through e-commerce," says Alibaba CEO David Wei. "We continue to look for synergies and investment opportunities to grow our customer base, acquire additional technology and add new applications that will help our customer base grow and prosper. Vendio is our first acquisition in the U.S. and we are open for more partnership opportunities. The connection of Vendio with Alibaba.com will completely integrate the e-commerce value chain between the B2B and B2C platforms, fully realizing the B2B2C model. I am confident that our complementary businesses will create enhanced opportunities for our customers."

The acquisition is part of a $100 million investment plan for AliExpress that Alibaba.com announced back in April. However, actual financial terms of this deal were not disclosed. It is expected to close as early as next month.

The partnership will allow Yahoo Japan merchants to list some eight million items in a Chinese-language TaoJapan section.

Taobao, a subsidiary of ecommerce firm Alibaba group, will offer 50 million products from China to Japanese consumers on Yahoo Japan’s China Mall. The two platforms will launch on June 1.

"We are pleased to help Japanese small businesses sell their products to China on our Taobao platform as we believe more choice is a good thing. As a result of this initiative, our respective customers will eventually be able to choose from millions of products from China and Japan," said Jack Ma, chairman and CEO of Alibaba Group.

"In addition to providing our respective consumers with broader choices, both Alibaba Group and SoftBank also understand the power of e-commerce to change the fortunes of small businesses for the better and that’s why we have decided to create a solution that brings about benefits for both the small businesses and the consumers in China and Japan, and around the world."

Taobao and Yahoo Japan expect the new offerings will create jobs by helping to increase small business growth through ecommerce and by opening markets for goods and services for domestic merchants by creating access to overseas sales.

Taobao and Alibaba Japan will jointly operate TaoJapan. Taobao will operate the website and Alibaba.com Japan will act as a fulfillment service provider for Yahoo Japan China Mall.

Alibaba.com Japan is a joint venture between Alibaba.co and SoftBank Corp.

"We expect that the Asian economy will continue to grow further led mainly by China and Japan, and that the Internet business and e-commerce business will be the core of that growth," said Masayoshi Son, chairman and CEO, SoftBank Corp, and chairman of the Board, Yahoo! Japan Corp. SoftBank is the largest shareholder in Yahoo! Japan with a nearly 41 percent interest.
 

This may turn out to be a significant moment for both sides.  Alibaba is a successful ecommerce platform based in Asia, with about 47 million registered users, but of course AliExpress is brand new.  And PayPal is a big moneymaker for eBay, with roughly 84 million active accounts in existence, but Asia isn’t its home market.

Together, then, it’s possible that they’ll achieve quite a lot.

David Wei, the CEO of Alibaba, even said in a statement, "Our work with companies such as PayPal is crucial, because we want to make sure we are meeting the needs of our customers by making payment as fast, safe and easy as possible."

PayPal’s also happy about the move – and looking forward to future developments – as Farhad Irani, Vice President of PayPal Asia Pacific, wrote in a blog post, "We’re very excited to have this fantastic new merchant join the PayPal franchise and I look forward to letting you know about other news out of Asia as it happens."

Yahoo acquired its 1.14 percent stake in Alibaba.com during the company’s initial public offering in 2007.  Now, Reuters reports that Yahoo will sell the stake at a 4.0-6.4 percent discount on Alibaba’s most recent closing price.

That might indicate that Yahoo’s in a bit of a hurry; there’s a definite concern, at least, about how both Yahoo and Alibaba.com shareholders will interpret its move.  (A relevant note: Yahoo’s stock is already down 1.22 percent this morning).  But even after the discount, Yahoo should realize a profit of 47 percent or more, which makes its investment look like a good one.

Here’s another important detail: Yahoo is holding onto its 40 percent stake in Alibaba.com’s parent company, Alibaba Group, so it’s not getting out of China or anything of the sort.

John Spelich, a vice president at Alibaba Group, also stated, "We are pleased to learn of the Yahoo! decision because having broader ownership of Alibaba.com with increased liquidity and support among institutional investors is what Alibaba.com hoped to achieve when it released the cornerstone investors."

Anticipation of a big gain with Microsoft’s interest in Yahoo turned to disappointment for investors in major Chinese online player Alibaba. Jack Ma’s company saw shares fall 4.7 percent after Microsoft CEO Steve Ballmer declared takeover negotiations at an end with Yahoo.

One Hong Kong analyst said in Reuters that shareholders were bailing out fast. “Investors had been buying this stock on hopes that Microsoft will buy into Yahoo but with the acquisition failing to materialize, disappointed investors are dumping shares,” said Ben Kwong, chief operating officer at KGI Asia Ltd.

Another analyst said the end of the takeover won’t hurt Alibaba long term. “The news may have affected sentiment but has very little to do with what the company can do in terms of earnings,” said Francis Cheung, analyst at CLSA.

Alibaba enjoyed a rush of interest with Microsoft’s pursuit of Yahoo. Shares rose significantly as speculators awaited a sweeter deal from Microsoft, just as they did with Yahoo when Microsoft first made public its interest in acquiring the iconic Internet portal.

US industry observers expect a drop in Yahoo’s price on Wall Street as well. After hours trading already knocked over 20 percent of Yahoo’s market cap off the business, and it could go lower if investors opt not to believe Yahoo CEO Jerry Yang’s optimistic outlook and two-year plan for his business.