Alibaba transferred Alipay ownership without Yahoo approval

Yahoo continues to show signs of having a tense relationship with e-commerce giant Alibaba

Yahoo said that Chinese e-commerce giant Alibaba Group transferred ownership of its online payment service Alipay without its knowledge or approval, a sign of continuing tension between the two companies.

Yahoo owns 43 percent of Alibaba Group as a result of a $1 billion deal made in 2005. But the value of that investment could be eroded now that a key part of Alibaba Group's business has been moved out of the company.

In the regulatory filing made earlier this week, Yahoo revealed that control over Alibaba Group's online payment service Alipay had been completely transferred to a Chinese company owned by Alibaba's CEO Jack Ma. The restructuring was needed so that Alipay could obtain a license from authorities in China, which is requiring third-party online payment services of nonfinancial institutions to be domestically owned.

But on Thursday, Yahoo released a statement saying the company, along with Japan's Softbank, another major Alibaba shareholder, only learned of the restructuring at the end of March, months after the transfer began in August of last year. Yahoo said the decision was also made without approval from Alibaba Group's board of directors, which the company and Softbank both sit on.

Alibaba Group Vice President John Spelich, though, said that Alibaba Group's board had discussed the new requirements on China's online payment industry at numerous board meetings in the past three years.

Yahoo said in a statement it continues to work closely with Alibaba and Softbank "to protect the economic value for all interested parties." The companies are currently holding discussions involving the terms of the restructuring.

The transfer of Alipay highlights the ongoing disconnect between Yahoo and Alibaba Group. Both parties originally had high hopes with the investment in Alibaba back in 2005, that transferred all of Yahoo's Chinese properties to the e-commerce giant. But the relationship has since deteriorated because of clashes over business issues, with Alibaba now believing it has nothing to gain from the deal.

Alibaba even went as far as to hold negotiations last year with Yahoo to get it to sell off its stake in the company. But those talks failed.

"The relationship soured long ago," said Mark Natkin, managing director of Beijing-based Marbridge Consulting. He added that there was no apparent reason for Alibaba to neglect notifying Yahoo about the transfer earlier. "It's not a sensitive matter, and as such, one would expect that Alibaba would notify its shareholders," he said.

The fallout from this move could leave investors with the perception that China is "too unpredictable of a market, and too difficult to navigate," he added.

"Right now we are hearing that Yahoo, Softbank and Alibaba are in discussion about how the two foreign partners can be compensated," Natkin said. "But again, it's coming after the fact in negotiations where the foreign partners don't seem to have much leverage."

Alibaba's Alipay currently ranks as China's largest Internet payment service, with a 51 percent market share, according to Beijing-based research firm Analysys International. Alipay's dominance is fueled in part by Alibaba's e-commerce sites like, China's largest online retailer.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuesYahooMergers / acquisitionse-commerceAlibaba.cominternetSoftbank

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles


PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?