Yahoo China missing from Microsoft search deal

Yahoo's China properties are independently operated by China's Alibaba Group

The search tie-up between Yahoo and Microsoft does not affect Yahoo's China properties, which are controlled by e-commerce giant Alibaba Group, the group said Thursday.

It was not immediately clear if Microsoft would seek a separate deal with Alibaba regarding Yahoo's China search engine, but the statement announcing the partnership between the two U.S. companies billed it as "global."

Microsoft and Yahoo this week announced a long-anticipated deal on Internet search. The algorithm used by Microsoft's Bing search engine is set to power Yahoo searches as well for the next ten years, while Yahoo will sell premium search advertising services for both companies, they said. In exchange for its added traffic, Microsoft will pay Yahoo an 88 percent cut of the search revenue generated on sites owned and operated by Yahoo.

But the deal does not affect Yahoo's China properties, an Alibaba spokesman said. Yahoo China is "managed independently of whatever Yahoo U.S. chooses to do," he added via text message.

Yahoo obtained a 40 percent stake in Alibaba Group in 2005. As part of that deal, Yahoo gave control of its China operations to Alibaba.

The Microsoft-Yahoo statement on the search deal said that "Yahoo will continue to syndicate its existing search affiliate partnerships," an apparent reference to Yahoo China.

A Microsoft representative declined to comment, referring to the press release for details. Yahoo did not immediately respond to a request for comment.

Microsoft and Alibaba representatives did not comment when asked if the companies are in talks. But Steve Ballmer and Jack Ma, the CEOs of the two companies, have met twice in recent months. Ma and other top Alibaba executives met Ballmer during a March visit to the U.S., where they discussed potential partnerships with companies including Microsoft, eBay and Google. Ballmer later visited Alibaba's headquarters in Hangzhou, China, while visiting the city in May to announce a deal with the local government.

Alibaba operates leading e-commerce Web sites in China, including business-to-business site Alibaba.com and auction platform Taobao.

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Owen Fletcher

IDG News Service
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