Yahoo plays rough with Alibaba

Alibaba's Jack Ma may be regretting his tangle with an aggressive Yahoo.

Jack Ma, CEO of Chinese Internet giant Alibaba Group, is hoping a card laid isn’t a card played. Five years ago, the company that owns three of China’s fastest-growing e-commerce businesses — the equivalent of PayPal, eBay and a business resource site — sold 40% of its share to Yahoo in exchange for $1 billion and control over Yahoo’s China site.

The professional relationship between the companies started to sour last year, when Yahoo unexpectedly sold its share of the site. They also stood on opposite sides of the dispute between Google and the Chinese government. On May 25, Alibaba offered to buy out Yahoo’s share of the company but was rejected. Most recently, Yahoo Hong Kong, which previously had no direct presence in China, has announced it would take advertising from businesses on the mainland.

To complicate matters further, according to the original deal, the U.S. company has the right to take a second seat on the board of Alibaba starting Oct. 25, on which the company itself has only two seats. This would shift the company into foreign control, along with the board seat held by Japanese-owned Softbank, making it challenging to get government approval for an IPO of Ali Group subsidiaries and shifting power away from Ma.