The fraying marriage between Yahoo Inc. and Alibaba Group Holding Ltd. reached a low point Friday as the two sparred over the way the Chinese company transferred a key business to its chief executive. Yahoo claimed it was blind-sided by the transaction, fueling questions about whether the Internet giant has lost control over its most valuable investment. It also turns a spotlight on the increasingly difficult challenges facing Western companies trying to do business in China.
Already, Yahoo, whose 40% stake in closely held Alibaba Group is valued at as much as $10 billion, has lost $2.7 billion in market value since the dispute became public Tuesday. The disagreement centers on the transfer of one of Alibaba Group’s key properties, a PayPal like online-payments unit called Alipay, to an outside company controlled by Alibaba Group’s founder and chief executive, Jack Ma.
The companies on Sunday issued a joint statement saying that they are “committed to productive negotiations to resolve the outstanding issues” on Alipay. They declined further comment. Yahoo, which holds one of Alibaba Group’s four board seats, had said it didn’t learn about the transfer until March 31, seven months after it had occurred.