Yahoo pulled into Google fracas, Alibaba reacts

SHANGHAI Sat Jan 16, 2010 1:13pm EST

A view of the office building of Alibaba (China) Technology Co. Ltd on the outskirts of Hangzhou, Zhejiang province November 10, 2009. REUTERS/Steven Shi

A view of the office building of Alibaba (China) Technology Co. Ltd on the outskirts of Hangzhou, Zhejiang province November 10, 2009.

Credit: Reuters/Steven Shi

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SHANGHAI (Reuters) - Yahoo got pulled into a growing row between China and Google on Saturday, as its Chinese partner slammed Yahoo's statements supporting Google while a source revealed the search giant had stayed silent about cyber-attacks.

Yahoo knew it had been a target of sophisticated Chinese cyber attacks on U.S. firms before Google alerted the company to them, but remained silent while its bigger rival went public, a source familiar with the situation told Reuters.

Yahoo's Chinese partner, e-commerce firm Alibaba Group, in which it owns a 40 percent stake, nonetheless called "reckless" Yahoo's comment last week that it stood aligned with Google's positions.

Meanwhile, a Google spokeswoman on Saturday denied Chinese online reports that it has already decided to shut down its google.cn site.

"Alibaba Group has communicated to Yahoo! that Yahoo's statement that it is 'aligned' with the position Google took last week was reckless given the lack of facts in evidence," the firm said in a statement on Saturday.

Yahoo said Wednesday it stood aligned with Google's position that attacks on company networks are deeply disturbing and that violation of Internet user privacy is something that must be opposed.

That was a day after Google announced it might exit the China market after suffering a sophisticated cyber-attack on its network that resulted in the theft of its intellectual property.

Google said it was no longer willing to filter content on its Chinese language google.cn search engine, and would try to negotiate a legal unfiltered search engine, or exit the market.

Its spokeswoman said on Saturday that Chinese reports that Google has already taken a decision were untrue, and denied that employees have been put on paid leave.

"It's business as usual," she said.

She said she was "unaware" whether China staff have been denied access to codes, as some bloggers have said, but added that Google is still scanning its systems following the attack.

TESTY PARTNERSHIP

Alibaba, which runs Taobao, China's largest online retailer, as well as China's largest e-commerce website Alibaba.com, has had a testy relationship with Yahoo ever since the departure of Yahoo's former chief executive Jerry Yang.

Yahoo folded its search business and invested $1 billion in Alibaba Group in 2005 in exchange for a 40 percent stake. The U.S. search giant sold its stake in Alibaba.com late last year, surprising Alibaba executives near their 10th-year anniversary.

It is believed that Alibaba wants Yahoo to sell its stake in the wider group, but Yahoo has said it views the now multi-billion dollar stake in Alibaba as a key investment in China.

In China, companies tread carefully on topics sensitive to the Chinese government. Firms like Baidu Inc, NetEase.com and Sina tend to self-censor without much prodding from the government.

(Additional reporting by Doug Young; Writing by Lucy Hornby; editing by Patrick Graham)

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Comments (5)
geola wrote:
“Firms like Baidu Inc, NetEase.com and Sina tend to self-censor”

My understanding is that Baidu Inc. is OWNED by the Chinese government. If so, the claim “self-censoring” is misleading. The other companies might me government owned as well.

On the other hand, the “self-censoring” companies must be the beacon of hope that right-wing and ultra religious conservative hope for. After all they are only “protecting” the people from porn and subversive ideas that they need to be protected from. Right?

Jan 16, 2010 9:51am EST  --  Report as abuse
RussianJew wrote:
To Geola: I agree with you. Not only Baidu, but all Chinese companies are OWNED by Chinese government. Fortunately for US, Americans, all our companies OWNED by People of America, like you, Geola, for example. It just happens that our companies are buying ALL the goods they are selling to us from Chinese companies OWNED by …
Geola, how anything useful could be produced in US with self-UNcensoring people like you?

Jan 16, 2010 10:27am EST  --  Report as abuse
AndyMike wrote:
Before Google entered the Chinese market, it funded the development of Baidu.com which is exactly why Baidu’s interface looks exactly like Google’s except for the logo. Google sold off its interests in Baidu after Google decided to enter the Chinese market.

Anyway, it would be be good for all foreign technology companies to block China from gaining more technology information. And it is always a good idea to beware who the company will be employing especially in China. Don’t forget that they are Communists.

Jan 16, 2010 11:23am EST  --  Report as abuse
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