Alibaba Group phases out Yahoo’s China presence

After seeing its popularity decline, Yahoo’s Internet portal in China has formally closed down, in a sign that e-commerce giant Alibaba Group is transitioning away from the brand.

The portal went offline on Sunday. Its closure is rooted in an agreement Yahoo made last year with Alibaba Group, which has control over the Yahoo brand in the country.

For years now, Alibaba has operated Yahoo’s China business as part of $1 billion deal investment from the US company made back in 2005. In exchange, Yahoo acquired a 40% stake in Alibaba.

But last year, Yahoo agreed to sell part of that stake back to the Chinese e-commerce company, following ongoing disagreements between the two Internet giants. The share buy-back resulted in Yahoo granting Alibaba "a transitional license" to continue operating its brand for up to four years.

Since then, Alibaba has been phasing out Yahoo products. In December, Yahoo’s music service in China went down. Then earlier this year, Yahoo’s China site announced the closure of its e-mail service, which formally went offline last month.

Sunday’s shutdown of Yahoo’s Chinese portal is the result of a strategy adjustment, the site’s team said in an Internet posting. The portal, at cn.yahoo.com, now reroutes to an Alibaba site promoting public welfare projects.

Alibaba declined to elaborate on the site’s closure. Yahoo had no immediate comment.

The popularity of the Yahoo portal site has gradually waned over the years, as the influence of Chinese Internet companies has only grown. In May, the site ranked as the 10th most-visited Internet portal in the country, according to CR-Nielsen, an Internet research company.

Alibaba likely has no more use for the Yahoo brand, considering that the company is focused on e-commerce, and not media portal sites, said Li Zhi, an analyst with Beijing-based research firm Analysys International.

"China Yahoo has been under Alibaba for many years. Its most valuable properties have been dismembered and used," she said, pointing to how Alibaba had originally wanted access to Yahoo’s search technologies. In 2009, however, Yahoo decided to use Microsoft Bing to power its searches.

"Alibaba already has no need for a China Yahoo that’s been squeezed dry," Li added.

IDG News Service

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