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Alibaba-Yahoo! Case B: Jack Ma Takes Alipay

This case summarizes complex international partnership issues and provides a good example of the fraught relationship between Alibaba and Yahoo described in Case A.

When Yahoo announced in May 2011 that Jack Ma had transferred Alipay away from Alibaba Group to his personal control without its knowledge, it unleashed a wave of criticism for both sides. Investors criticized Yahoo’s inability to realize value from its sizable Asian investments. Jack Ma was blasted for unilaterally making the decision to take control of Alipay in light of changing Chinese government regulations for such payment providers. He was seen as leading international investors to lose trust in Chinese companies, especially those using the variable interest entity (VIE) structure to attract overseas investment.

Case advisor: 
Li Wei
Case writer: 
Richard Bethune
variable interest entity, investment, partnerships