Yahoo says that Alibaba Group transfered ownership of its payments unit Alipay to another entity without informing the board or shareholders, Bloomberg reports.Here’s what’s going on: Yahoo is a big shareholder in Alibaba, which is the biggest e-commerce company in China. Alibaba transfered ownership of its payment unit Alipay to an entity majority-owned by Jack Ma, the founder of Alibaba. This sent Yahoo’s stock diving because some investors think most of Yahoo’s value is in its Asian investments like Alibaba and Yahoo Japan.
So now of course Yahoo is unhappy about it. Yahoo and Softbank, also a big Alibaba shareholder, want Alibaba to be compensated for the transfer. Ostensibly the transfer happened to comply with Chinese regulations on foreign shareholding in payments services.
But really this is the kind of stuff that happens day in and day out in China, with assets changing hands overnight for some reason. And somehow, it’s always the Western company that loses out.
As China analyst Bill Bishop says, “Welcome to China, Yahoo.”