♠ Posted by Emmanuel in China,Internet Governance
at 1/18/2010 06:25:00 PM
I'm gonna board your ship and turn it on out
No soft sucker with a parrot on his shoulder
'Cause I'm bad gettin' bolder - cold getting colder
[NOTE: Please bear with me with what should be the last 80s video to come in a long time. I though it very apropos to post, though, for reasons that'll become evident.] From what we know, Yahoo has had an "I'll stand by you" moment in sympathizing with Google's plight in China. After all, it too was hit by phishing attacks. Interestingly enough, Yahoo's partner in China is the Alibaba group, whose e-commerce site bills itself as the world's top business-to-business marketplace. Much friction has emerged between Yahoo and Alibaba despite their pact. Unsurprisingly, quarrels between the two have occurred over accommodating Chinese government diktats. Jack Ma of Alibaba has not been shy in criticizing Yahoo over these, although Yahoo still owns 40% of Alibaba.
Coming back at Yahoo's stated support of Google, Alibaba has called its partner yet again. The Financial Times declares that Yahoo has been "rapped" by Alibaba:
Yahoo’s Chinese partner issued a scathing criticism of the US technology company at the weekend, calling it “reckless” for publicly supporting Google’s threat to quit the country in protest over a wave of Chinese cyberattacks. Alibaba Group, in which Yahoo holds a 40 per cent stake, said it had “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. Alibaba doesn’t share this view”.Speaking of "rap", the video from the Beastie Boys song "Rhymin and Stealin" came to mind with its nautical theme (Alibaba and mutiny on the bounty, natch. Just love those sampled John Bonham drums from Led Zeppelin's "When the Levee Breaks"). It seems the fallout from the Google declaration is spreading and may impact other firms like Yahoo with Chinese partners. That is, the latter may be more reluctant to raise the PRC's ire while the former may be getting fed up with heavy-handed tactics emanating from Beijing. These conflicts of interest should play out in interesting ways. Whatever Google's ultimate choice is, there's no doubting that it will have repercussions on any number of foreign investment arrangements alike Yahoo's. In all honesty, Yahoo's search service was not doing very well, so it may be yet another martyrdom ploy. Still, Yahoo needs to tread lightly on Alibaba if it wants to keep this relationship alive.
Yahoo had no immediate response. Yahoo and Jack Ma, Alibaba’s founder, have clashed repeatedly, with Yahoo upset that Alibaba has allowed Yahoo China to play a smaller part inside the group while its share of the Chinese search engine market dwindles. Alibaba has moved its online classified business from Yahoo China to Taobao, a rival internal property.
Google’s revelation that it was no longer willing to censor search results as required by the Chinese government has turned the spotlight on other western technology companies such as Yahoo and Microsoft that do business in the world’s largest internet market by user numbers. So far no other company has followed Google’s lead in threatening to pull out of the country or refusing to comply with Chinese censorship regulations.
Yahoo is believed to have also been targeted in the cyberattacks that Google says prompted its public challenge to Beijing and last week it issued a statement supporting Google’s position. “We condemn any attempts to infiltrate company networks to obtain user information,” Yahoo said. “We stand aligned that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is something that we as internet pioneers must all oppose.”
Alibaba is China’s largest e-commerce company and represents Yahoo’s only real presence in the country after the US company turned over its Chinese operations and paid $1bn for a 40 per cent stake in Alibaba in 2005. Yahoo is a passive investor with only one representative on Alibaba’s board of directors and no management responsibility or oversight at the company, according to Alibaba.
The decision to outsource its China business came after Yahoo was heavily criticised by human rights groups and western governments for handing over e-mail messages to the Chinese government which were used to jail human rights activists and political dissidents. At the time, Jack Ma, Alibaba’s founder, said he was willing to hand over any information requested by the Chinese government and that the company always complied with Chinese laws and regulations.
Meanwhile, TIME has a feature I can't say I'm necessarily in agreement with. Here, Zachary Karabell says that despite the common belief that China isn't very innovative (a view I share), the opposite holds true in the cyber-realm. Importantly, these net-savvy thirtysomethings typically have connections to PRC elites, making them more attuned to what is and what is not acceptable while doing business in China:
The failure of these New Economy players in China is in stark contrast to the success of brick-and-mortar companies. Consumer stars like Nike, food franchises like Kentucky Fried Chicken, industrial giants like General Electric and United Technologies, and technology behemoths ranging from Microsoft to Intel to IBM have prospered in China. In fact, mainland China has been the most impressive growth market for hundreds of global companies for the past decade. So how did Google stumble so badly?
The rap on China's growth is that there's lots of building and selling but not much innovation. In many areas of the economy, that's true — and the same could have been said for the growth of the United States at the end of the 19th century. But in the areas of media and the Internet, it isn't. There, China has a thriving culture of thirtysomething entrepreneurs, many with U.S. work experience, who are creating home-grown franchises catering to the burgeoning world of the web in China. Baidu, the rival search engine to Google, is most in the news lately; others include web portal and entertainment companies Sina and Netease; on-line, multi-user gaming company Shanda (which recently made an acquisition of an American gaming company and plans to expand to the United States); internet and mobile applications giant Tencent; and a host of others, some public, some still in start-up mode.
These companies have a distinct advantage over foreign competitors because their founders and senior managers are part of the same elite class as the regulators who enforce the various and mostly unwritten rules of censorship. They have offices in Beijing, and they lobby the Chinese government through uncharted back channels and are in what amounts to a continuous dialogue about what is and what is not acceptable.
In any event, it's game on for Alibaba--isn't it punching itself by beating up Yahoo?
Terrorizing suckers on the seven seas
And if you've got beef - you'll get capped in the knees
We got sixteen men on a dead man's chest
And I shot those suckers and I'll shoot the rest
