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Rumor: Alibaba Group, Yahoo Reach Agreement on Alipay

The Wall Street Journal, 6/01/11

Chinese e-commerce conglomerate Alibaba Group and Yahoo have reached an agreement in principle in order to resolve the dispute concerning the transfer of ownership of Alibaba Group's online payment processor Alipay, an industry source has told the Wall Street Journal.

According to the source, under the terms of a proposal struck between Alibaba and Yahoo last week, Alibaba and chairman Jack Ma pledged that Alipay will not draw down future revenues from Hangzhou-based C2C & B2C e-commerce site Taobao, thus affecting the value of the latter. In theory, Alipay can charge fees on transactions made on Taobao, taking a relatively large share of Taobao revenues.

The proposed agreement needs the approval of another major shareholder in Alibaba Group, Japanese telecommunication and media firm Softbank.

The proposed solution could include a plan for Jack Ma's new Alipay company to provide further compensation to Alibaba Group for the transfer of Alipay. It is not currently clear how much money Jack Ma's new company paid Alibaba Group for the transfer of Alipay.

Editor's Note: For more information on this topic, please see "Rumor: Yahoo Rejected USD 3.5 Bln Offer for 15% of Alibaba Group," MD 5/26/11 issue.

Keywords: third-party payment Jack Ma e-commerce Taobao Internet Alipay Softbank Yahoo online payment Alibaba Group e-payment

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