14 DAY TRIAL // There is a sign of easing tensions between Yahoo and Alibaba, even if it's a rather faint one. The bad blood between the two companies, which are inescapably linked since Yahoo owns about 40 percent of the Alibaba Group, escalated last week with the announcement that the Alipay unit was transferred from Alibaba's control over to a Chinese company owned by Alibaba founder and CEO Jack Ma, without Yahoo's approval.
This lead to a war of the words, Yahoo was really not pleased about it and complained that it and other shareholders did not approve of the transaction.
Alibaba countered by saying that Yahoo was notified about this sort of transaction a couple of years ago and that it was all due to new regulation and laws in China, which require payments services to be owned by Chinese companies, and nothing else.
"Alibaba Group, and its major stockholders Yahoo! Inc. and Softbank Corporation, are engaged in and committed to productive negotiations to resolve the outstanding issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible," the two companies said in a joint statement.
That's all that the two companies had to say about it, but it's definitely a sign of improvement, considering the tone of the discussion last week. Tensions between Alibaba management and Yahoo, the biggest shareholder, are nothing new, though.
Yahoo owns 40 percent of Alibaba since 2006 when it paid a hefty sum for the stake along with transferring Yahoo China ownership to the Chinese company.
But the poor performance in the home market, along with Jack Ma's ambitious goals and disapproval of new CEO Carol Bartz, led to a strained relationship.
Alibaba wants to get rid of Yahoo and has said in the past that the biggest shareholder doesn't bring anything to the table, not even from a technology stand point.
Alibaba tried to buy back its share, but the two sides couldn't agree on the price. Yahoo's value as a whole largely depends on its stake in Alibaba and Yahoo Japan, which is operated by Softbank, another shareholder in Alibaba.
In fact, Yahoo lost $2 billion in value in the stock market after the new issues broke out last week. Despite all of this, Alibaba still needs Yahoo and is stuck with it for better or for worse so the two sides are at least trying to reach common ground for now.