10:16 am: Walt takes the stage to introduce Peter Kafka, who will be interviewing Ma for the absent Kara Swisher today.

Peter Kafka: It seems like every time you’re on stage with us, we have to talk about Yahoo. So we may as well get that out of the way right away. We heard from Jerry Yang. What’s the latest? We know that you’ve expressed interest in buying all or part or some of Yahoo over the summer; in the past you’ve been trying to sort of at least get Yahoo out of Alibaba. So where do things stand right now?

Jack Ma: I think we still have not changed our mind, and we keep our strong interest on the Yahoo. The things that we are waiting for the Yahoo board, and especially their independent directors, to tell us what exactly they want to do.

PK: What do you think they want to do?

JM: I don’t know. [laughter] I’m waiting.

PK: And what have you proposed to them?

PK:JM: Well, I think not us, I think a lot of people have already talked to Yahoo for years. And I think we are, we have to know exactly what their — I know they have a lot of options, but you have to take one option first, what they want to do.

PK: Yeah, Jerry Yang said they have a lot of options, a lot of things on the table.

JM: Okay, I did not know that.

PK: They’re going to make one decision.

JM: Yeah, they have to make one decision.

PK: So, in the past you said, “I’d like to extract myself from Yahoo,” and I think you surprised some people this summer at Stanford when you said, “I would like to buy all of Yahoo.” Is that still what you would like to do if you had that option?

JM: Yes.

PK: You’d like to buy the entire company … Alibaba –

JM: Yeah, even though, as I said, if the, their board say … Yahoo, I’m interested. If our piece. We are interested, but just let us know what they want to do. [laughter]

PK: I understand why you’d want to buy back Yahoo’s stake in your company.

JM: Yeah.

PK: Why would you want to own the entirety of Yahoo?

JM: Well, I think Yahoo is so important to us, and we are also very important to Yahoo. And Yahoo is also so important to the industry. And we, you know, we’ve been thinking about that for a long time, we talked to Yahoo for a long time, and of course we know there is something that we can add value to Yahoo.

PK: Why are they important to the industry? Why — and how could you add value?

JM: Well, Yahoo, without Yahoo probably I will not start my Internet business, ’cause Yahoo, when I started business, Yahoo was my idol. And I don’t want my idol to fall down, and it’s so important to us, ’cause we are partners for so many years. And you don’t want to see your partners in trouble. So, if you can do anything to help, just help. If they don’t want the help, then don’t help them.

PK: But you guys have said recently, several times, that really that Yahoo doesn’t add a lot of value to your operations here. So I don’t want to belabor this, but I would assume that the main value to Yahoo would be to sort of get them out of your hair. But if you had to run the U.S. part of the company, and Jerry was on earlier and said the idea is to become the premier digital media company, is that what you would do with the Yahoo U.S. operations, and operations outside of China?

JM: I never tried to say, “Well, we want, I want the team, I want the market to know what exactly the company should do.” The people should know where they want to do, and make this thing come out and happen. Otherwise, this thing will go nowhere.

PK: Well, you said the people, you mean the management?

JM: I mean the management, and the people — I mean, when I say people in the company it’s about my colleagues. We know this is what we believe, if it is our belief, make it happen.

PK: So, if you were in charge of all of Yahoo today or tomorrow, what would you do? It’s your management.

JM: I think Yahoo is a great company, with great assets. And also, I think there’s so many great CEOs in U.S. that can run this business well.

PK: So you would bring in new management?

JM: Yeah. I don’t, I don’t — I think it’s a big challenge for Chinese people to go to the U.S. and run an American company. But we could definitely help.

PK: And you have a shortlist of people you’d like to hire? You want to tell us who you’d put in charge? [laughter]

JM: That’s, that’s too early to discuss about that.

PK: Okay, I tried.

JM: Of course, we will be thinking about that now.

PK: And I think you can answer this pretty quickly, but in the past, it’s been quite obvious that if you were going to buy all of Yahoo, you’d need financing, you’d need partners. And then there was a weird story that came out earlier this week, and it was a translation issue perhaps, but it said, “Jack Ma says ‘I have $20 billion, I can buy all of Yahoo by myself.’”

JM: Yeah.

PK: Am I missing something?

JM: I absolutely don’t have $20 billion. [laughter] But I’d love to, right? I think money’s, finance is not, never a problem. Today the financial market is no good, but the money is there. We’ve been working with Yahoo for years, and trying to buy some back and work something out, so we never think that the financial is a problem. The problem is what they want to do.

PK: Jerry was here, did you talk to him earlier? Did you ask him this yourself [laughter]

JM: No, I did not meet him today, and I just arrive last night for this event and go back.

PK: I’ve got to say, one of the cool things about an event like this is backstage — you can’t see this, but there’s lots of people hovering back. And you just talked to Jack Dorsey, from Square and Twitter, I think that was the first time you guys had met.

JM:: Yeah.

PK: Do you think there’s a business relationship between your company and either Twitter or Square, going forward?

JM: I think there will be a lot of business going on with our company with the U.S. economy — I see when I look at so many American amazing Internet companies. I think there are so many things that we can work together. So many. If, especially when we go to the States, we have to find partners, instead of finding competitors. And when they come to China, they need partners. And we are one of the best partners people can find.

PK: A lot of U.S. companies have come here with mixed records: eBay, sort of a competitor of yours, came, basically left; Google left for different reasons. Why do you think some of the big Internet companies have struggled, the big U.S. Internet companies have struggled in China?

JM: I think any company go to any nation, you need to have this struggling. The very important thing you should have is patience. And instead of looking at your own strategy about the … you should focusing on the customers in the local market. Serve them well, just like any entrepreneur, any business going there. For example, when we start Alibaba, I never thought this thing, and I believed this thing would never succeed within first five years. Takes about at least eight, 10 years. When I start a … I say, “Let’s wait ten years later, not now.” So if you come to China, or any big Internet companies, think about five, 10 years later what’s going to happen, instead of next year, five months later what is going to happen.

PK: You started your first Internet company in 1995, when most people weren’t starting Internet companies in any part of the world, with the exception of a few in the U.S.

JM: Yeah.

PK: Were you looking out five, 10, 15 years ahead then? Or were you just marveling at the fact that you could use Prodigy to dial up to the Internet?

Jack: Well, yeah, I start — You know, people know about Alibaba knew about … Alibaba know about today what we are doing. But the people did not know our China pages and our, the … Web sites, all filled. They only see some good side and they don’t want to see the bad sides. And when they see the bad sides, they forget about the good sides. So, I think it’s a long, when we started, we thought it would, we probably would be successful in three years and fail. And then, we start Alibaba, we know, “Okay, it takes long time.” When we start Alibaba — Taobao, we say, it’s a long time. When started Ali-Paint we know it a long time. So whatever we do today, everything, and I think as the CEO, everything I did, the decision I made, I asked myself, asked a team, “What’s this thing going to happen in five years?” And 10 years? Not in five months. I don’t want to see five months.

PK: And with the pace of change in any part of the world, but especially with the Internet, especially with Asia, where all these things are growing so fast, is it realistic to say, “I’m going to try to predict what the world will look like in five years?”

JM: Absolutely. I think when everybody’s talking about a fast and quick, you should think about slow. When everybody think about slow, you know, we have a long time, let’s move fast. This, this is always the right way to do business. Well, I did that, and now we, and everybody, everybody’s criticize this, and so wait a minute, let’s think about it. Everybody think this is a great, okay, be careful because you may not have the chance.

PK: Counterintuitive thinking, it works for a lot of people. One of, one of the themes that I, Walt brought up with Jerry, and I think he’ll, we’ll bring up throughout the conference, is this notion that a lot of what we’re seeing in China from the technology community, or what we could charitably call imitations of things we’ve seen in the U.S. Most of the stuff here comes from the U.S., and in iterates, to put it politely. First of all, do you agree with that, with that description?

JM: Mmm. No, I don’t really. I think, you know, the na–, I respect intellectual properties, I respect the great ideas, innovation, but these things, if nobody use it, if nobody devel–, if nobody innovate on innovations, that’s a big problem. You know, the IM was AOL first — I think the ICQ first made it, but now … make it even better. Right? And Twitter did a great job, and Weibo in China, also did a great job. And China invented the … but the USA and Western country made it better. The campus, everything, you know. The war is about learning.

PK: So you’re not spending time thinking, “How can I create the most innovative possible company,” you wanted to, that’s not keeping up enough.

Jack: I never think about “How can I make this company most innovative?” only think about how can I make my customer much happier and comfortable and last long. I don’t care whether people call you, “Jack you’re, your innovative company, or internet techno–” We are service company. Our job is using Internet as a tool to serve the customers, instead of, “Oh, we are innovative company.”

PK: And let’s be clear about who your customers are, ’cause it — some people might be confused about it. It’s generally not a consumer, right? You’re generally a B2B play.

JM: Yeah, we started from B2B play, we just focus a small business. My customer, as I said, my belief is my customers always be small business entrepreneurs. ‘Cause I’ve been working as a start-up entrepreneur for 15 years. And I know how tough it is, how difficult it is. Somebody, if somebody got it, help them, it’s not, Jack Ma can’t help them, it’s the Alibaba people useI internet that can help the small business. So, my customer is small business, entrepreneurs, and …

PK: [interposing] Small-business entrepreneurs who want to sell something, you enable that.

JM:: Sell something on the Internet.

PK: Like these shoes.

JM: Oh, yeah, yeah, this the shoe I bought on Taobao, because, oh, some, some lady in the countryside, they are making shoes and selling online, and I think if I buy it for $20-$30 … and they can have a job and they have fun, and I feel very comfortable. I think I’m getting older, love this kind of shoes. It’s very comfortable.

PK: They look comfortable. I might get some for the flight back, I don’t want to have a Kara Swisher incident. [laughter] But you guys just raised prices for some of your merchants, and that inspired a big protest. And you didn’t really back down. You didn’t change your mind. When customers or people who say that they’re customers, tell you they’re unhappy with the way the company is run, and you don’t change your mind, you say, “I’m going to go ahead,” what should we take away from that?

Jack: Yeah, the the past 10, 10 days was the, one of the most painful days for me, in my life. And when I fly back from the States to China to solve the problem, I listened to music, there’s a sunset, the people hurt you most are the people you love most. And I love the … I never thought about that. Alibaba never think about raising, you know, for the, raising the price and collecting more money from the poor SMEs. The purpose for doing that is because we want against the fake products, intellectual properties.

PK: So let’s explain exactly what you did do.

JM: Okay. We have, for Taobao’s side, we have one billion proud listings. And we have over 70 million unique visitors every day, and we are probably the largest e-commerce site, if not in the world, we’re at least in Asia. But there are a lot of fake products, intellectual property issues, and so we got to solve this problem. If we don’t solve the problem, Taobao will never last long. Three years, five years, we’re in trouble, ’cause we have to respect these things. So we said, “If anybody sell these kind of things, if you sell one, we find out, we’ll pay fine for five times.” And take the businesses seriously. And anybody come to Timo, which is focus of big B2C, all this big business –

PK: It’s the equivalent of a mall, an online mall.

JM: It’s a mall. We have 50,000 business selling these things on our site. So we said, “Anybody, if you’re on Timo, no intellectual property issues, no fake products,” all those were serious punished. And this message turned out to be we raised 10 times more fee. Because, thanks to the Internet time, you know, people don’t believe for the, what you want to do, people believe the rumors.

PK: You blaming that on the Internet or just human nature? The answer is human nature. [laughter]

JM: I think human nature plus the Internet [laughter] growth very fast.

PK: We’ll do our best to get things accurate. At least this is being recorded, so people can always check, check back. But you still had a lot of people protesting, and you didn’t back down. You said, “Well, we’ll try to make this more palatable for you, we’ll create funds that will make this easier for some merchants.” But it didn’t cause you to rethink your strategy?

JM: No, I, I’ve side, I announced firmly and clearly that we will never step one back from the intellectual property problems. And, and these fake products, and these is trust problem. So, but, helping small business entrepreneurs, we will do it. And the way, how we communicate, we are reviewing ourselves. So, that is why we invest. The problem, this problem can never be solved by Alibaba alone. This problem can never be solved within three years. It’s a long one, this is why I’m getting, oh, terrible days. But you know, this is why they probably decide to need us.

PK: I think if you buy Yahoo, there’ll probably be more difficult days ahead.

JM: More problems, oh, yeah, oh, yes. [laughs] Oh, yeah.

PK: But you’re okay with that.

JM: But you know, you know, if life is so short, if you really do, can do something, that help others and meanwhile you enjoy it, you know, enjoy. The other side is a pain. It’s your own choice. If you pick it up, go ahead. My friend said, if you pick up the way go to paradise, go ahead. If you pick up the way go to the hell, go ahead. [laughter]

PK: What about a nice middle ground? [laughter]

JM: No, you have two options, you have to pick up one. [laughter]

PK: Back to the U.S. for a minute. You bought a couple companies in the U.S., some of the other big Chinese Internet companies, Ten Cent in particular, have bought several more. Is that something that interests you? Do you want to acquire more companies within the U.S., or are those sort of one-off purchases?

JM: Well, I think we are interested in partnering more, and we are interested in invest — I think U.S. in need more Chinese investment, foreign investment. And they should accept it, because it’s good for USA, it’s good for the others. And I don’t want to come, to go to U.S. or go to Europe and just to go there fighting. We want to go there partnering.

PK: And the reason it’s important for the U.S. to take in Chinese investment? Spell that out for us.

JM: They need jobs. They need innovation from the others. Yeah, they, I think it’s great, U.S. have so many great innovation, like Apple, this and that. They also need a tiny SME innovations, which we can bring.

PK: You don’t think eBay’s going to take care of that on their own?

JM: Well, I think that eBay should take it up themselves, you know, they have great ideas and they, they develop it. Does not mean that this market should be eBay alone. And they come to China, I mean, anybody can do.

PK: So, you sort of own this commerce market in China.

Jack: Well, no, we are contribution.

PK: You dominate it. [laughter]

Jack: Yeah. I help.

PK: It’s a good thing. And the other big Chinese Internet companies all do things that are separate from that, but it seems like you’re starting to rub up against each other, along the side. Baidu is the dominant search engine, you’ve created your own search product. And you said something to the effect of, one of the reasons we’re doing a search engine is we want to sort of make it difficult for the folks at Baidu to sleep at night. Do you think you’ll become more direct competitors over time?

JM: Yeah. Yeah, absolutely, because it’s good for markets, it’s good for industry. It is good for — we are, we’ve been separating Taobao three, three companies, in June, you know, because Taobao’s getting bigger, so I separate it in three. And the other, one of the reason is that I want, that make, running big company like a small company, make us small and the industry will be bigger. If we are big, industry was small. So, separate to three, and I said, well, 10 years later, any small piece of the three pots bigger than the others, let’s separate the three again. So, the competition, I don’t really focus on competition a lot. Competition is just, to me, is a dessert, it is a fun part of the business.

PK: But inevitably, like the bigger you get, and the bigger your people who aren’t competitors but might be, get, that stuff’s going to overlap. I mean, the analogy in the U.S. would be Apple and Google weren’t competing for a long time; now they are. Amazon is, in theory, a separate business from Apple and Google, but there’s a lot of overlap there, on and on and on. Do you think that’s inevitable in China?

JM: Absolutely. This is a market effect. You have to face it, you have to challenge it. And e-commerce is … Taobao is big, but compared to the tomorrow, the future, e-commerce, it is pretty small. It is pretty small. It is just a beginning. And I think it’s not — one thing I feel very different, because not only may, not only China, especially in the U.S., a lot of people that do their business, think first of competition. And I think the first is the customer, how big the customer base. And then think about, when you get tight, let’s find some competitors.

PK: So, don’t go find a market where there’s no competitors, find a market where there are a lot of customers and …

Jack: [interposing] Exactly. When you get bored, find the competitors. [laughter]

PK: [laughs]

Jack: Yeah, it’s true.

PK: You’re not bored yet.

Jack: Well, no. I’m kind of busy, I have to go back to business, you know?

PK: Let me just ask you a couple philosophical questions. Someone asked you a question, I’ve seen it on some previous interview, about donating money to charity and doing philanthropy. And your answer, in short, was, “I’m not that interested in that because what I think, I think the best use for my money is to build companies and to create jobs.” Do you ever think about reconsidering that, and thinking, “Well, maybe I could do something with these resources”?

JM: Well, I never said that I do not donate money to something. I think we probably contribute, I don’t know about the other Internet, Chinese Internet, we give 0.3 percent of our revenues to … to the environment protection.

PK: Right.

JM: Right? And we, I think, you know, I think together with my colleagues, we prob–, I probably spent a lot of money and efforts on doing this thing. Because it’s my private thing, I just don’t want to tell in the public it’s a private thing. I don’t want to say, “Well, I’ve donated money here.” Because for a business, I agree with … had a business, we have to bury our social responsibility into our business model. Instead of, well, “I’m making some money here by cheating the others,” and then donate money. I hate that. The business model itself should be, create value, and be good to the society.

PK: But, very often what a customer wants, you’re trying to serve the customer, may not be good for, say, the environment, right, the two can be–

Jack: And then don’t do it.

PK: –in natural conflict. So, who, what wins, if there’s a conflict between what a customer wants and what the effect might be on the environment?

JM: I think the choice is very clear. If it is hurt the environment, if it is no good for the society, just don’t do it. No matter how much money–

PK: Even if the customer says, “Give me more of that.”

JM: Well–

PK: “Take down that tree, dig up that hole.”

JM: Yeah, exactly, just … did last week, people say, “I want in on these kind of fake products,” intellectual properties. I say, “Well, kill me or put me in the prison, this is my decision.” I have principles.

PK: Is it realistic to have companies self-regulate themselves instead of the government doing it? I mean, we have this debate in the U.S. constantly, we go back and forth. Right now the pendulum is sort of tilting I think towards self-regulation.

JM: Yeah, where, whether there’s a government regulate or yourself, it’s your own belief. If you believe it is right, you don’t need other people to discipline you. And it’s better for the market, you know, company’s a market product. What I believe is that this is something you’re doing this good for the others, just do it. Right? Don’t wait for the government come. And if they can come, sometimes things get messed up.

PK: Another government question. In the earlier interview with Yahoo, Rose said, I think it was Jerry, perhaps, it was Jerry, said, “It’s an open question about whether or not censorship is going to ultimately stifle real entrepreneurial spirit and drive and creativity in China.” And it may be that enough government restriction will make it difficult for entrepreneurs to really succeed on the level we’ve seen in the U.S. and other countries. Do you agree with that?

JM: Well, it depends on which angle you see. I think censorship is, yeah, it’s issue, but it’s not that big issue. Let’s look at the good side of the Internet, let’s look at the good things you can do. This is always my optimistic view. If you focus on one side, for example, censors were so serious you got tied up about that, and we started developing the others. And I think Chinese government is sometime, you know, they are getting, they are getting more and more open. And then in some period, they’re getting close. Which I think it’s very natural for people like me, sometimes very happy, sometimes not happy. You know? Confidence … Tai Chi …

PK: [interposing] Do you think they inevitably, do you think they inevitably grow more open as commerce grows, as the country gets bigger? Or do you think they could still pull back?

JM: Yeah, this is, this is what I’m doing. I think the e-commerce, the commerce and trading, trading can help people understand each other, make full use of the Internet by creating value for the others. And then the more they do it, if you’re accountable, they release. So, but, I think it’s like in the company, when I look at my colleagues, my partners, my assistant. If you look at the bad side of this guy, you can never make things forward. Well, his best side is my, this is why I, they need me. Because Jack Ma’s shut … that’s why Jack Ma needs partners. So I think we try sometimes, you know, censorship, let’s see as a business what’s the opportunity we can do? And then, make them comfortable, things will get better. I hate to criticize people, I mean.

PK: But you will.

Jack: Yeah, sometimes get just annoyed, and I mean, then I criticize myself and then change, you know, this is life.

PK: So we started this interview 25 minutes ago, I asked you about Yahoo, this situation changes a lot — has anything changed in the last 25 minutes? Are you going to buy Yahoo [laughter]

Jack: No.

PK: Okay.

JM: No. I said we are waiting for answers. And there are so many people talking, and talking to us. And we will start to talk to them. Very, in the next few weeks. Because if we don’t do it, it’s no good for all of us.

PK: So if I ask you in a few weeks, I’ll get an answer.

Jack: I wish I could, it’s not on my side, it’s their side.

On to the audience Q&A …

Q Hi, I’m Justin Fung from HSBC. In your China 2.0 interview at Stanford, you mentioned that China’s going to go through many of the same challenges that the U.S. is going to go through in about three years. Can you go into a little bit more detail as to why you feel that’s going to happen in three years? What are the key issues that they’re driving at?

JM: Thank you. I’m not a financial columnist, but I just as a business guy, you have to smell what’s going on in the market. It’s instinct. And I think what’s happening to the U.S. today, and Europe, is going to happen in China, next three, five years. The problem, like of job problems, the problems like the economic structure problems, will all appear. So, the import/export problem, because the Asia — the USA economy and European economy, the China exporting, the problem is getting even worse, it’s getting worse. And the other thing is a domestic demand, we need take actions. And also in China called upgrade. Upgrading you have to pay the price. And I don’t see people are ready to pay the price yet. And these things are losing, and anything three years later, I think the past 30 years, for the first 10-some years, private sectors bump up the China economy. And next 10 years, in the international companies, multinational companies, half to China.

PK: Can you be clear about what you mean by upgrading? Who needs to upgrade? What are they upgrading?

JM: Well, China government it’s called upgrading, you know, and transforming called [Mandarin] upgrade whatever management or upgrade the industry. Upgrade, you have to pay the price. For example, I’m upgrading Taobao against these kind of intellectual properties. I got to pay price, I got 50,000 people demonstrate against me. But that’s the price you have to pay. If you don’t pay, come back to work, get bigger. So, this is the issue we are facing. We have to take the challenges. And I don’t see a lot of people ready to take challenge. They’re ready to talk, but don’t take challenge yet. So, if we don’t take challenge, three years later you will see what’s going on. So that’s my point: Let’s get ready for that, and jobs, as in small business, private sectors, they are going to be facing troubles. And we have to get ready for that. Thank you.

PK: In 2008, in retrospect, it’s easy to say you saw this coming, but you did see that there was going to be the credit collapse.

JM: Yeah.

PK: How are you feeling about the next six months to a year, nationally, internationally?

JM: Well, I don’t see there are any, for China. I’m pretty confidence in the next two years that, well, the problem will come in three, five years.

PK: And can you imagine what that precipitating event will be? What will trigger that problem?

JM: I don’t, I’m not fortune teller, just to say this thing is going to happen. And we got ready for it. If this thing, if we’re ready, that thing does not happen, everybody happy. For example, when we talk about the financial crisis, what’s the early beginning of year 2008, we find something wrong. So, I make the whole economy get ready for that.

PK: What was the signal to you that there was something wrong in 2008?

JM: Import/export is in problems. And people, for the forums, every forum I go, people talking about IPO, people talking about PE, people talking about profit margin, yet nobody talk about the value we created. People start greedy, people — everybody’s talking about how many, you know, times you can go, if you got to raise money and the IPO. So I know something wrong. People change. If everybody change that direction, this angle is in problem.

Q I’d like you, if you could talk about online currencies in China, their importance, and how you see the government attitude towards them as they grow.

JM: Okay. Honestly, I’m not, I may not be right, because few years ago when we talk about the online virtual money in the Alibaba internally, and I’m, I was strongly against it. Because I think if you are doing business in China, better believe IMB is the only currency. And if there anything that could probably get annoyed people or the government, just don’t do it, because there are so many ways you can do it. So, I was against it, and later that thing grows so fast. And I still think that Alibaba should not involve that. So that’s why Alipay the only currency for Alipay is IMB. Which, you know, we accept U.S. dollars, too. [laughter] But virtual money, I worry about that. I don’t — I just don’t want to have, like, 1,010 minutes of coins which I don’t know what I’m going to do. And the bigger that thing is, the government would take action. And they will. Any government will. I don’t know how, but I, I think they will. So, but based on the IMB, U.S. dollar, the pounds, I feel more comfortable on that. So, for example, why we did not do the online gaming? Because when, many years ago when everybody, any company, goes, “Let’s do the online gaming thing,” I know someday the government would take action where every kids are learning how to killing. [laughter] Something’s going to happen. Now it’s peaceful and quiet now, it’s much better. This is, this is, say, this is what I — when either you can make the too big or this become two bigger problems. Somebody got to involve it. So, I don’t know, I cannot answer the question, I just Alibaba does not have the intention of doing that, ’cause I worry about.

Q: Hi there, Richard Lai from Engadget here. Your company recently released Aliyun OS, which is a new mobile operating system. And last month you announced plans to release an English version, and even a tablet version in the near future. Can you talk about what benefits that will bring to the Western market, and even to Alibaba itself?

JM: I think, you know, a lot of companies are talking about cloud computing. And we take it very seriously because we have so much data. Datas from small business, datas from the consumers, and datas from Alipay transactions. And I think three years ago, we met internal, the strategic meeting, I sat. We don’t know how to make from the datas, but I believe datas will be so important to our small business, our consumers, and manufacture base. So, let’s, let’s invest money, then. We’re not sell, because of cloud computing, we are selling softwares; we’re not selling hardwares, we are selling services to these. So, this is our principle. And the, the OS for the, for the mobile phone, I think the next big wave, which we have to face the challenge is mobile Internet. We should make Internet mobilized. And how we can, how we can do that, China have like, I was told 60, 600 million mobile phones. And most of them are feature phones. And one thing struck me why I want to do — when people talk to me, they say, “Jack, we’re going to OS, we’re going to launch an OS.” I was shocked, “What, OS?!”

So complicated, how can we do that. Right? ‘Cause why Alibaba can do it? And these crazy guys working for, for one year, you know, our OS came out. It’s not beautiful, like any babies when they were born, it’s ugly looking. [laughter] But the mom always say, “Beautiful,” right? But takes time to make it beautiful. I said, “Wow, the baby’s there, let’s make this beautiful baby, baby beautiful.” But the thing that make me work on whether we will have the opportunity to do it, or the other company have, the opportunity to do it, China needs an operating system to lower the cost of mobiles. And I read one news, which I was touched, moved and I came back to talk to the CEO of Ali … We pay any price to move this industry up.

PK: You don’t think Google, Apple, people who are in the OS business, already spent a lot of years making that ugly baby prettier? You don’t think they can do this for you?

JM: Let ‘em do, let them do it. They should do it, like on eBay when they have 90 percent market share, I want to do it. The purpose I do it is different from eBay. And I think the market is so big. You know, I tell you the news, why I, the news I made full determination to do it. I read an article in the newspaper, there is a girl, 11 years old, her parents went to the city, as a, you know, as a city worker, and brought her, brought them together. She was 11 years old, the only things stay with her was three cats, seven chicken, in a lonely big house. And she wants to make phone call to her parents, but it’s too expensive, and it’s also so far away from where she live, in a village. So, I say, “Let’s make this mobile thing cheap. Make these girls can call their parents, brothers, at the cheapest prices. Second, when I see my daughter playing the iPad, I think all the girls should have this opportunity. And as whether we’ll make money or not, I don’t care, ’cause Alibaba, you know, we have so much cash, we need to be invested for the future. Let’s do it. So, this is what I believe.

Q: Does this also mean you’re also looking into maybe offering data service, as well?

JM:: Yeah.

Q: So, does that mean you’re looking into maybe entering that market as well?

JM: Yeah, at least if we’re not entering the market, we want promote, we want to encourage more people entering that market, making sure that the total cost of mobile going down, making sure China with the, with the managing factory capability, with innovation, with so many people today telling me, said, “Jack, you know, to make a Internet entrepreneur, this job is so difficult, because you guys are there.”

PK: So if you’re not going to get into wireless yourself, how do you encourage other people to do it and to bring the price down?

JM: Yeah, we are building up the infrastructure as always. We are not making trade our self, we build up a platform, making all the Taobao and Alibaba sellers to do it. We try to promote the industry, to make industry, because see, last six months was amazing, amazingly funny. When we announced we go to the mobile things, suddenly everybody said, “We are being in mobile system.” This is what I want. Let’s get people move with that. Because the mobile Internet is such a huge potential market for next China’s innovation.

Q: Coming back to Yahoo, there’s so much speculation about this future of Yahoo, but something most people are agreed on is that whatever happens to Yahoo, Alibaba is going to be thickly involved in any deals surrounding Yahoo. Do you agree with that analysis?

Q: Can be any deal for Yahoo without you being involved?

JM: Oh. I did not know we’re so important. [laughter] We wish we could, that’d be, that’d be that inference. But definitely, we are the main driving force. And we want to be the main driving force, and we want to do this thing as a partner-like thing.

Q: Okay, one follow-up question is you mentioned your interest in buying the whole of Yahoo. But do you see other outcomes for Yahoo? Do you think perhaps some people have speculated perhaps you’ll be interested in buying back your own stake held by Yahoo? Is that a possible outcome? Do you think that is more likely? Less likely than the sale of the whole of Yahoo?

JM:My answer, first, we are ready. Second, we also have options. And third, we are eagerly waiting for answers. [laughter] And they have to make decision. Today, as this environment, all the beautiful flowers withdraw very quickly. [laughter] And we got to, time is so precious for all of us. It’s not a good, it’s no good for Yahoo. It’s no good for everybody.

PK: So if you can sum up, Jerry Yang, Yahoo, independent directors, please make up your mind. Signed, Jack Ma.

JM: Yes! [laughter]

While they are usually much less voluble than the chatty Web execs of Silicon Valley, the execs who run China’s fast-growing Internet companies seem to be keeping up just fine of late.

On Friday, for example, the Alibaba Group’s Jack Ma was positively effusive about wanting to buy all of Yahoo, a company which actually owns 40 percent of Alibaba. “We are very, very interested,” said Ma at an event at Stanford University.

Now, in an interview with Bloomberg, Renren CEO Joe Chen decided to take a smack at Ma over his disputed spinoff of its Alipay payments unit, which caused a high-profile ruckus with Yahoo earlier this year.

“It’s quite unfortunate,” Chen said to Bloomberg about disagreement, which has since been settled. “It caused a lot of uncertainty about Chinese Internet companies.”

Them’s fightin’ words, and a source close to Alibaba reacted with, well, reaction.

“Yeah, it shook confidence so badly that Silver Lake and DST [Global] just decided to put in billions to back Jack Ma,” referring to a recent funding deal by the large investors. “People shouldn’t try to blame their own lack of performance on others.”

Ouch!

Actually, Renren has bigger problems than Alibaba.

According to a substantive report in The Wall Street Journal yesterday, what’s really hurting Chinese Internet companies is the declining stocks caused by recent accounting scandals there, which may have attracted scrutiny from U.S. regulators.

Wrote the Journal: “A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.”

Hence possible investigations by the Securities and Exchange Commission that will surely drag Chinese stocks on U.S. exchanges down more.

And indeed, the stock of Renren — which had its own controversial issue with accurate data reporting at the time of the IPO of the social networking site earlier this year — declined 13 percent Friday, along with other Chinese companies listed here.

In answer to a direct question about whether his company was going to buy Yahoo at a forum at Stanford University in Silicon Valley this afternoon, Alibaba Group Chairman and CEO Jack Ma said: “We are very interested.”

Said Ma: “We are very interested in Yahoo. Our Alibaba group is important to Yahoo and Yahoo is important to us … All the serious buyers interested in Yahoo have talked to us.”

Finally, at least one crystal clear answer in the confusion at Yahoo. More importantly, it is the first time Ma has indicated that he wanted to be a principal player in any deal around Yahoo rather than an element of a buying group.

Later, in answer to a question I posed about how he was going to do that, Ma said he wanted the “whole” company, but that the effort was complicated and included a number of players.

Again, he said: “We are very, very interested.”

I also asked him if he had visited Yahoo in his trip to California, which Ma said he has not in 15 days here so far. He said he has mostly been sleeping and eating, as part of a longer-term visit to the U.S.

Ma’s declaration came as part of a lively closing keynote speech at Stanford University’s Graduate School of Business, where he talked about the Chinese Internet company’s growth, focusing on how China is the next great Web economy.

Talking about competitors such as eBay, which have tried to enter the huge Asian market, he joked that “eBay might be sharks in the ocean, but Alibaba is a crocodile in the Yangtze.”

Of course, given his presence in Silicon Valley, one topic of interest was whether Ma would be heading over to visit nearby Yahoo and what role he will play in the current internal debate over the company’s future in the wake of the ousting of its CEO Carol Bartz.

The disposition on Yahoo’s Asian assets, which includes 40 percent of Alibaba and a large stake in Yahoo! Japan, are critical to the current strategic review of the company, since they make up a large part of its market valuation.

In comparison, the value of its U.S. and other global assets are small.

When later asked about his experience of being involved with Yahoo, which made a very canny investment by Yahoo co-founder Jerry Yang in Alibaba many years ago, Ma also said that he would do it again, but not in the same way.

The same way has to do with the level of foreign ownership, which Ma has been trying to reduce in a number of ways and which Yahoo has thus far resisted.

To answer a question about the fight between Ma and Yahoo over its Alipay fight, when Ma spun it out of Alibaba, he said the situation was tense, but that today “the problem is solved and I am half-burnt.”

He was referring to a settlement, which will require a lot of growth from the still-nascent online payment business.

Ma was asked later about the biggest misunderstanding in the U.S. about China and vice versa. “Our job is not to solve the misunderstanding,” he said. “Our job is to change ourselves to solve the problem.”

In another query about his relationship with Yahoo’s Yang, Ma called him a lifelong friend and also said he appreciated how much that meant to Alibaba’s beginnings.

“But, this is business and not personal,” Ma said about the current situation. “While we appreciate yesterday, but we are looking for a better tomorrow.”

The first line, for those not mad fans of the classic movie like me, is from “The Godfather.”

The question is, though, will Ma make Yang an offer he can’t refuse?

Silicon Valley’s Silver Lake and DST Global of Russia, as well as Chinese private equity firm Yunfeng Capital, are leading a $1.6 billion tender offer for privately held employee and shareholder stock of China’s Alibaba Group, according to sources close to the situation.

Yunfeng, by the way, was co-founded by Alibaba Chairman and CEO Jack Ma, as well as other prominent Chinese entrepreneurs.

Along with DST, Silver Lake and Yunfeng, Singapore-based investment firm Temasek is also participating in the tender offer as an investor, but in a smaller way.

The deal, which has been discussed for some time, was signed earlier today and will be presented to its employees in an internal company blog, which will be in Chinese.

To get around persistent foreign ownership issues in China, sources said, DST and Silver Lake are ceding voting control of their stakes to Alibaba management.

If the tender is fully subscribed, that would mean a stake of just under five percent for the group, sources said, and it gives Alibaba a $32 billion enterprise valuation.

The impetus for the tender offer, which begins today, appears to be trying to address a cash-out, paper-rich issue for Alibaba employees.

There are no active secondary private markets in China, as is the case for tech start-ups in the U.S., and there is also no IPO in the foreseeable future for Alibaba. Thus, management has been looking for a way to give its employees and also other shareholders some liquidity.

This tender offer is not a capital raise by Alibaba and is only aimed at eligible employees and shareholders. The purchase of the Alibaba shares is expected to close before the end of December.

It will be done via a special investment vehicle, specifically aimed at this purchase, that includes a spate of investors. Giant Interactive Group, a Chinese online game developer, for example, said it had committed $50 million to the fund.

It’s not clear what the implications are for Alibaba’s biggest shareholder, Yahoo, which sources said is not selling shares in the tender offer. Yahoo’s fully diluted Alibaba 39 percent stake is now worth $12.5 billion in the deal.

That’s discounted due to tax issues and also the inability of the Silicon Valley Internet giant to sell its Alibaba shares.

In other words, investors will likely welcome this higher valuation, but realize a public offering is farther away than ever.

But it is interesting in that it clearly shows a strong relationship between DST and Silver Lake, which have jointly been mulling a possible bid for Yahoo along with Silicon Valley venture firm Andreessen Horowitz, as I previously reported.

Some will speculate that Silver Lake and DST now have an in with Alibaba, which is important, since a large slug of Yahoo’s market valuation is due to its Alibaba and also Yahoo Japan! assets.

If Yahoo is sold, of course, the disposition of the Alibaba asset is an important part of the deal.

More to come, including the implications for Ma, who has been under siege of late around his spinning out of Alibaba’s Alipay payments service and the noisy battle that later ensued with Yahoo. Yahoo and Alibaba, as well as its other large shareholder, Japan’s SoftBank, settled that dispute earlier this summer.

His involvement in Yunfeng, which is buying the company’s shares in a special fund that Ma is not in, will likely attract some scrutiny, anyway.

Sources said Ma is a minority investor in Yunfeng itself, has no control rights and is not a director. In addition, Yunfeng has no relationship with Alibaba.

In another interesting twist, Alibaba rival Tencent has close ties with DST’s Internet affiliate that used to share the same name, having invested $300 million last year in the affiliate that holds major Russian Internet properties.

You would think the settlement of a major dispute would goose the stock of a company, but Yahoo’s deal with its Chinese partner Alibaba Group on Friday did exactly the opposite.

Despite the clearing of an obvious overhang to its shares, the stock of the Silicon Valley Internet giant dropped almost three percent Friday to close at $13.10. While the ongoing federal budget wrangling was partly to blame, it was only a very small part with an overall market decline of under one percent.

A tepid reaction to the deal — in which Yahoo, Alibaba and Japan’s SoftBank came to terms over the spinoff of Alibaba’s Alipay payments unit after much wrangling over the move — came quickly from Wall Street analysts.

A report titled “Yahoo Inc: Alipay Agreement: Better than Nothing, But Not That Great,” by J.P. Morgan’s Doug Anmuth, was typical. Pointing to no clarity on an IPO of the Chinese assets of Alibaba and that “prior to the divestiture, Alibaba Group owned 100% of Alipay and all of its income, which is now reduced to 37.5% ownership of Alipay and 49.9% share of the pre-tax income,” he noted that Wall Street “has recently assigned no value to Yahoo!’s share of the asset.”

Well, less than zero, if the stock decline is taken into account, which means Yahoo’s market cap is now just over $17 billion.

According to sources close to the situation, especially since Yahoo’s Asian assets make up more than $9 billion of that valuation, private equity investors and others are pulling out their spreadsheets once again about a possible takeover or privatizing of Yahoo.

Several months ago, for example, former News Corp. exec Peter Chernin had been contemplating a friendly bid with partners such as Providence Equity Partners and others. While there have been rumors recently that he has reengaged in that effort, that is unclear.

Sources also note that Yahoo’s top execs, especially CEO Carol Bartz, and also members of its board, are perplexed that the settlement in China — a positive development — had the opposite effect on the stock.

It’s part of a continuing decline. Yahoo shares are down almost 26 percent in the past three months. Most Web stocks — such as Google, Amazon and Microsoft — are strongly up in that period. The only other obvious laggard is AOL, which is down almost 16 percent in the past three months.

As these companies are wont to do in the middle of the night, Yahoo, SoftBank and the Alibaba Group have reached an agreement in their nasty dispute around the Alipay payments unit, and they are ready to talk about it.

Well, not Alibaba’s CEO Jack Ma (pictured here), Yahoo’s CEO Carol Bartz or SoftBank’s Masa Son, but their functionaries are all set to discuss the deal.

The issue has revolved around the spinning out of Alipay by the Chinese Internet giant Alibaba, without the approval of large stakeholders Yahoo and Japan’s SoftBank, which the pair felt was a big no-no.

Much mishegas followed, but the trio has been hard at work on a settlement, which is here now.

Of course, had the three companies cooperated in the first place as joint owners and board members of Alibaba, this all would have been unnecessary.

5:48 am PT: The call starts without all kinds of regulatory info about what can and cannot be said, before being thrown to Yahoo CFO Tim Morse.

One interesting wrinkle is that SoftBank’s Ron Fisher cannot speak at all, due to some Japanese laws, which are unexplained. But, said Morse, he’s there to show his support.

Go, Ron!

Alibaba’s CFO Joe Tsai is up first to talk about the deal over Alipay, which he stresses does not really make much money now. As he says, it is “marginally profitable.”

Tsai walks through the facts that they have already outlined earlier today, including a variety of payments from Alipay to Alibaba, since — let’s be clear — it used to be part of Alibaba.

But Alibaba said it had to spin it out in order to get critical regulatory approvals from the Chinese government, which caused this mess.

Morse now comes on, noting the whole squabble really had “no direct impact” from a financial point of view on Yahoo or SoftBank at this time related to its Alibaba assets.

Well, shareholders of Yahoo might beg to differ, considering the huge hit the stock has taken due to the fight. Wall Street has long considered Yahoo’s Asian assets its most valuable part.

But Morse is pleased the complex agreement has finally been reached — I am guessing it was not easy to negotiate among three different countries with so much pressure.

5:59 am: Time for Q&A!

The first question is about more deets and also about the possibility of a liquidity event for Alibaba or its various units.

Tsai underscores that there might not be one or there might be one. In other words, the Chinese assets of Yahoo may or may not ever pay off.

The next question is about why Yahoo and SoftBank should have a cap on an asset they used to own 100 percent of. Good point!

Neither Morse or Tsai really answers the question, except for Tsai talking about how certain rules over foreign ownership of payment companies in China means it had to be like this.

“If you own 100 percent of the business that cannot operate, you own 100 percent of zero,” said Tsai.

Translation: That’s China, folks, so suck it up!

The next question is a promissory note, which Tsai says has value, even though it actually does not have value right now. China!

The analysts still are stuck on this fact that, under terms of the agreement, Yahoo will only get 37.5 percent of an IPO or other liquidity event, when it used to be owner of 100 percent of Alipay.

Good point: Will this happen to other Alibaba units, such as its Taobao commerce unit?

China is a good place to be, assures Tsai, which is cold comfort right now.

A lot of swirl around preferential terms in the deal for Alipay with Alibaba’s units, which seem to be the same as before. In other words, nothing has changed, except a lot of stock loss for Yahoo and less technical ownership of Alipay.

The Wall Street analysts on the line continue to be riveted to the idea of a liquidity event for Alipay and other Alibaba units, especially Taobao, and keep asking different versions of this question.

The last question is about more deets of the deal and new business ideas for Alibaba.

Tsai talks about a cloud-based system rolling out, for example.

The questioner moves to, you guessed it, a liquidity event.

“I don’t think we want to get into it at this point,” says Tsai.

Well, we do, but apparently Yahoo shareholders are not going to.

That said, the deal is finally settled, which has already given Yahoo shares a small bump today. And that’s not nothing.

Yahoo, SoftBank and the Alibaba Group have reached an agreement in their contentious dispute around the Alipay payments unit.

The trio have been in extended talks since Alibaba’s CEO Jack Ma spun Alipay out from Alibaba without the approval of Yahoo and Japan’s SoftBank, which own large stakes in Alibaba.

At the time, he said he did so in order to get critical regulatory approvals from the Chinese government. The move prompted an ugly fight between Alibaba and its partners.

In a statement, the trio said:

“The agreement is consistent with the two agreed-upon principles established at the outset of the negotiations: structure the inter-company relationship between Alipay and Taobao in order to preserve the value within Taobao and, by extension, within Alibaba Group; and provide that Alibaba Group is appropriately compensated for the value of Alipay.”

Under terms of the agreement, the three companies said that Alipay will continue providing payment services to Alibaba’s Taobao commerce site and other subsidiaries; Alibaba will be paid almost half of Alipay’s pretax income; and Alibaba will get between $2 billion and $6 billion — or 37.5 percent of the total equity value — in the event of an Alipay IPO or other liquidity event.

Yahoo has also filed a very detailed account of the deal here with the Securities and Exchange Commission, which you can read here and especially here.

Yahoo’s stock has risen 3.6 percent on the news so far this morning, but it is still just below $14 a share.

There will be a call at 5:45 am PT to explain it all, which I will be liveblogging, but here’s the full press release:

alipay

Yahoo turned in another weak performance in the second quarter, with yet another decline in revenue.

This time it was five percent, compared to last quarter’s six percent. In other words, at least things are looking up as they go down!

While earnings per share rose smartly, Wall Street is still looking for strong sales growth from the Silicon Valley Internet giant, which seems unable to provide it.

Blamed most this time for the revenue fall: Yahoo’s changes in its display sales operations in the key Americas region, reasons for which were largely unspecified in the initial company press release. (You can see the damage in this slide deck from the company here.)

Maybe Yahoo CEO Carol Bartz will explain it all in its upcoming conference call with analysts (or she could try the I-don’t-know approach taken by News Corp. CEO Rupert Murdoch in PhoneGate hearings in Britain earlier today!).

2 pm PT: It starts with the usual regulatory blah-blah, which I always enjoy.

Bartz gets right into it, opening with the key problems with China’s Alibaba Group, as well as its display and search revenue weaknesses.

The fight with Alibaba is over its Alipay payments unit, which was spun out of the Chinese company without Yahoo’s say-so. Yahoo is a big shareholder.

Bartz says that the company was working on a settlement night and day.

But she quickly gets onto how display did not perform as expected in its key Americas arena. “Obviously, I am not happy,” she said.

Obvi! Neither are shareholders, Carol.

She says it was not about new competitive development. It was not about the economy. It was not about engagement.

So what was it? Changes in its sales leadership and organization, says Bartz, which has included talent walking out the door in droves.

A lot more than Yahoo expected, but no surprise to anyone who has been paying any attention to the brain drain at the company.

Bartz promises a new approach to sales, part of its endless turnaround, which is beginning to feel like a digital version of “Waiting for Godot.”

Search revenue, though, says Bartz, was better than expected.

2:11 pm: CFO Tim Morse is on now, running through the numbers and the display shortfall in the Americas region.

“We simply did not have appropriate coverage,” says Morse, noting consumer products, tech and autos as weak spots in the advertising market.

Thank goodness, then, for the guarantees from search revenue in the Microsoft partnership deal.

More numbers and then it is back to Bartz to talk about search, which is going better than the last quarter, when it was the culprit for the revenue decline.

She says that Microsoft and Yahoo were working together to improve the issues.

“We’d like to be further down the road,” says Bartz about the goal of search revenue per search growth, as well as settling all the other problems, such as the Asian issues.

And, by further, I am presuming she means actual forward movement, which is what roads are actually for.

2:27 pm: Q&A time, the part of our program where Wall Street analysts do not ask the questions that need asking (and where I win fancy journalism awards for pointing this delta out!).

Therefore, Bartz is first thanked for providing “color” about the display disaster and is not asked about more specifics of the disaster itself.

The second question still does not get to it either, but she does note Yahoo’s sales force has to sell beyond “Gee, we’re big” and come up with better ad solutions.

“The issue is we did not have enough sales people in front of the big clients,” says Bartz.

That’s because all those former Yahoos are now working at Groupon, LivingSocial, Facebook and on down the line and now in front of big clients for those hotter companies.

2:34 pm: Question about its Asian assets. Yahoo’s talks with Yahoo! Japan and Alibaba are separate, says Bartz, although I would add that they have non-movement in common.

And also a question about Yahoo’s interest in the acquisition of the Hulu premium online video service.

Bartz winks verbally and says nothing, which translates into: Of course, it is interested.

More on the reasons for the display fall-off, which Bartz makes clear is not due to big competitive threats, but internal issues.

Maybe she’s saving big competitive threats as the reason for a revenue decline in the third quarter!

I look forward to the quarter I get the finger pointed at me for causing revenue to fall, due to my snarky posts.

Now, we are into softball questions about improvements in engagement. It’s up, but no one asks why Yahoo is still not doing anything very cutting edge in product innovation compared to competitors.

I believe Google has launched at least 14 new social networks since this Sunday, along with its strong quarterly performance last week. And Apple, well, blew away its quarter today as it is about to release more cool new stuff later this week.

And that might be the crux of the issue for Yahoo, which might not solve its woes by throwing a more focused sales army at the issue.

That’s because Yahoo’s products are simply not nearly has social as Facebook or even Google right now, which might be the true problem as old customers move on to new advertising solutions.

Whatever the reason, Yahoo clearly needs a refresh of its ad products and how it sells them, especially in its fast-growing mobile, video and communications products.

Bartz talks about getting better expertise, a tighter regional focus and other issues of going to market, which is perhaps something she might have realized many, many quarters ago.

After all, she’s been in charge for a while, and these issues are not new.

In fact, in an earlier quarter, Bartz was stressing “tentpole” events and anchor media properties and the power of the size of Yahoo as a selling point.

This was in April, in fact, in the first quarter of this year.

As I wrote then:

“CEO Carol Bartz excited was the Silicon Valley Internet giant’s traffic gusher for big tentpole events such as the Super Bowl and the Oscars. In fact, Bartz practically sounded like a gushy “Entertainment Tonight” flunky when talking to Wall Street analysts about Yahoo’s Oscar news, games and other offerings. She proudly noted the site’s efforts generated more than a billion pages views.”

Now big is out! Moving on!

The last question is another about Yahoo’s talks with its Asian partners.

“It’s complex,” says Bartz.

You can say that again.

No rest for the weary D conference producers!

Which would be Walt Mossberg and me, since we are now hard at work — after a very successful ninth D: All Things Digital — on our newest event: AsiaD.

An international confab — this one will be held October 19 to 21 in Hong Kong — is a big deal for us and we’re making sure it is up to snuff for our audience there.

That begins with the speakers, which we will start announcing now and continue to as we add them onto the roster. As we have said before, we’re going for a lineup of both Asian and U.S. speakers, as well as demos from the region, with a focus on the critical emerging market.

That’s why with smartphones in ascendance globally, having Andy Rubin, who runs Google’s Android efforts, is a no-brainer. The longtime mobile exec is at the top of an aggressive push by the Silicon Valley Internet giant to dominate the important sector across the world.

Speaking of domination, we are asking Alibaba Group’s Jack Ma onstage to talk more about his efforts to make the company a powerhouse in China and elsewhere. His recent bare-knuckled fight with Yahoo over Alipay, as he has built a wide-ranging Internet giant, should make for an interesting interview.

Expect a deep dive into what makes the future Web work with Twitter and Square founder Jack Dorsey, who is someone breaking new ground as he tears down old digital paradigms. With Twitter, Dorsey redefined the real-time world and how the virtual one communicates; with Square, he is upending the payments arena, even as others try to upend him.

Nvidia is not only a pioneer of graphics chips, but now its processors are widely used in the latest mobile devices. That’s why its founder and CEO Jen-Hsun Huang has a lot to say about the future of the fastest-growing sector of computing, from smartphones to tablets and whatever’s next.

And Asus Chairman Jonney Shih has presided over the Taiwanese tech giant since the early 1990s. Most recently, the company pioneered the netbook market and is now plunging deeply into the tablet business, making Shih perfect to discuss these key issues in Asia and around the world.

As usual with D, there will be more big names to come — and you can find out more here.

But it didn’t go on for long in the case of David Einhorn’s high-profile hedge fund Greenlight Capital, which today dumped an investment it made earlier this year in Yahoo on high hopes of the value of the Internet giant’s stake in China’s Alibaba Group.

That was before the ugly public fight Yahoo got into with Alibaba over its Alipay payment unit and especially with its voluble CEO Jack Ma.

In a letter to investors, Einhorn (pictured right) said the kerfuffle, which has hit Yahoo’s stock hard, “wasn’t what we signed up for.”

Yahoo shares are down just below two percent today and are now at $15.52 each.

Einhorn said in the letter that his fund had “a modest loss” in Yahoo, which sources said was about $20 million.

Einhorn had bought less than .65 percent of Yahoo, or about 8.5 million shares in March, which he said was due to his feeling that the company was undervalued with regard to its Asian assets.

Said Einhorn at the time: “We would not be surprised if YHOO’s 40 percent stake in Alibaba Group alone was ultimately worth YHOO’s entire current market value.”

Fast forward to today:

“The Partnership bought Yahoo! (YHOO) earlier this year based on a sum of the parts analysis, which included putting substantial value on its Chinese assets. Shortly after the purchase, the value of the Chinese assets came into doubt as the CEO of the Chinese unit hived-off a valuable subsidiary into a corporation that he personally controls. From there, the finger pointing started in every direction. This wasn’t what we signed up for. We exited with a modest loss.”

Here’s the full Einhorn letter, which appeared on zerohedge.com:

Qlet2011-02

The first is one I did with Jack Ma, the CEO and co-founder of the Alibaba Group, the giant Chinese online commerce company.

Ma has most recently been in the news for a fight Alibaba has been in with one of its biggest shareholders, Yahoo, over the transfer of its Alipay online payments unit out of the company.

Ma addressed this–including advising Yahoo CEO Carol Bartz to split up the company–and other issues in the interview.

The interview is subtitled in Chinese for our Asian readers, especially since our next conference–AsiaD–will be in Hong Kong in mid-October.

Here’s the Ma video:

]]> http://allthingsd.com/20110604/full-d9-interview-video-alibaba-groups-jack-ma/feed/ 0 http://allthingsd.com/20110601/alibabas-jack-ma-on-yahoo-talks-groupon-clones-and-his-advice-for-carol-bartz/ http://allthingsd.com/20110601/alibabas-jack-ma-on-yahoo-talks-groupon-clones-and-his-advice-for-carol-bartz/#comments Thu, 02 Jun 2011 02:58:01 +0000 Tricia Duryee http://allthingsd.com/?p=81743 Alibaba’s CEO Jack Ma tried hard not to turn his entire interview at the D conference to be all about the company’s ongoing negotiations with Yahoo about the fate of Alipay.

“This is like peace talks at the United Nations,” he said. “It’s impossible that the board doesn’t know what was going on…Someone has to take responsibility to move ahead.”

Other topics Ma was willing to address in his interview with Kara Swisher this afternoon, ranged from what it’s like to do business in China when thousands of competitors crop up overnight, which is an issue that Groupon is facing, to a few words of advice for Yahoo’s Carol Bartz on how she could turn around the ailing U.S. company.

Here are the video highlights:

]]> http://allthingsd.com/20110601/alibabas-jack-ma-on-yahoo-talks-groupon-clones-and-his-advice-for-carol-bartz/feed/ 0 http://allthingsd.com/20110531/report-yahoo-settles-alipay-dispute/ http://allthingsd.com/20110531/report-yahoo-settles-alipay-dispute/#comments Tue, 31 May 2011 21:17:30 +0000 John Paczkowski http://allthingsd.com/?p=80314 Yahoo has reportedly settled its differences with Alibaba Group over the transfer of ownership of its Alipay online payments platform, sources close to the company tell Reuters. Alibaba CEO Jack Ma will appear at D9 later this week.

]]> http://allthingsd.com/20110531/report-yahoo-settles-alipay-dispute/feed/ 0 http://allthingsd.com/20110526/bad-share-day-yahoo-stock-limp-after-investor-day-and-googles-swiping-of-its-ad-title/ http://allthingsd.com/20110526/bad-share-day-yahoo-stock-limp-after-investor-day-and-googles-swiping-of-its-ad-title/#comments Thu, 26 May 2011 19:07:15 +0000 Kara Swisher http://allthingsd.com/?p=78951

Apparently, reassurances about its relationship with Chinese partner Alibaba Group and some lively presentations by top execs at a six-hour investor day yesterday did almost nothing for Yahoo shares.

The stock of the Silicon Valley Internet giant continues to stay mired on either side of $16 a share today, as it has been since it got into a very public fight with Alibaba over the spin-out of its Alipay online payments unit.

Alipay got its license from the People’s Bank of China today, due in part to moving the unit to the ownership of Alibaba founder and CEO Jack Ma, but that also did squat for Yahoo shares.

Also dragging the stock down: An IDC report released today that shows that Yahoo has lost its number-one display advertising title to Google. The search giant’s share of that market in the U.S. rose to 14.7 percent in the fourth quarter of 2010, while Yahoo’s declined to 12.3 percent.

That’s not good news, even though both Yahoo’s Chief Product Officer Blake Irving and its U.S. media and advertising head Ross Levinsohn both gave energetic presentations at Yahoo’s investor day yesterday.

The two execs–one sporting a natty blazer and the other his patented hair-tastic ’do–trotted out a lot of can-do stats and fancy plans for the audience, which was mostly preoccupied with Yahoo’s China problem.

In contrast, CEO Carol Bartz, CFO Tim Morse and co-founder Jerry Yang were mind-numbingly rote on that thorny issue, noting that negotiations with Alibaba were ongoing and would remain private.

(As if–if I have anything to say about it!)

Bartz told the group of investors and Wall Street analysts yesterday that Yahoo “really believe[s] we are working towards protecting the value of Alibaba Group. The emphasis is on discussion. [We're] not going to get into a public back-and-forth.”

Having already done that in a ham-handed way the week before, that’s probably a most excellent idea for the shoot-from-the-hip exec.

In any case, investors don’t seem to want to take Bartz’s word for any of it until she delivers–both a China solution and, more importantly, turbocharging of both its core search and display advertising businesses.

]]> http://allthingsd.com/20110526/bad-share-day-yahoo-stock-limp-after-investor-day-and-googles-swiping-of-its-ad-title/feed/ 0 http://allthingsd.com/20110526/alipay-gets-its-license-to-operate-in-china/ http://allthingsd.com/20110526/alipay-gets-its-license-to-operate-in-china/#comments Thu, 26 May 2011 17:48:38 +0000 Beth Callaghan http://allthingsd.com/?p=78924 Alipay, the online payment service of Alibaba Group recently spun off into a separate entity controlled by Alibaba CEO Jack Ma, has been granted its license to operate in China. No official comment yet from Yahoo, which owns 43 percent of Alibaba and has been involved in an increasingly heated discussion about the fact that it apparently owns none of Alipay.

]]> http://allthingsd.com/20110526/alipay-gets-its-license-to-operate-in-china/feed/ 0 http://allthingsd.com/20110524/yahoo-preps-for-investor-day-tomorrow-while-investors-prep-for-a-yahoo-grilling/ http://allthingsd.com/20110524/yahoo-preps-for-investor-day-tomorrow-while-investors-prep-for-a-yahoo-grilling/#comments Tue, 24 May 2011 17:05:33 +0000 Kara Swisher http://allthingsd.com/?p=76947

The execs at Yahoo were huddled yesterday and also today, getting ready for its investor day tomorrow morning.

It’s probably a good idea, especially since the Silicon Valley Internet giant has to come up with a good answer to how it is settling the recent kerfuffle with Chinese partner Alibaba Group.

A settlement announcement over the spinoff of Alibaba’s Alipay payments unit would be the best thing Yahoo could deliver by tomorrow, of course.

All parties–Alibaba, Yahoo and Japan’s SoftBank–I spoke to said a resolution was still being worked on, but one assumes reaching one sooner than later would be a big coup for Yahoo.

Barring that, China will surely be Question No. 1–and likely Nos. 2 through 23–from about 200 Wall Street analysts and big shareholders gathered from 8 am to 2 pm at the Fairmont Hotel in San Jose to hear about how Yahoo is doing in 2011.

Given that the China problem has kept Yahoo stock stuck in the $16 doldrums for weeks now, after it had seen some progress before that, Yahoo CEO Carol Bartz and the passel of top execs presenting–Ross Levinsohn, Blake Irving and Tim Morse, among others–will have to scratch that itchy itch first before moving on to other questions.

In the interests of making the day interesting–and because press is not invited–I am here to help those investors without a clue of what to ask.

Thus, my list, in no particular order:

* Now that a newish management structure is in place, what is the big vision for Yahoo going forward?

* Please explain in detail the issues raised in the recent earnings call with the search and online advertising partnership with Microsoft, and should the deal be re-negotiated?

* Do you need to make more cuts in staff–which seems to have creeped back up in size?

* Why is Yahoo still in search in such a significant and expensive way, especially since market share is declining?

* How is the display market faring and how does Yahoo plan to innovate its flagship advertising business?

* Engagement is a key metric these days, so how is Yahoo going to improve its customer relationships, besides saying it will?

* What new and innovative products are in the pipeline–and you may not trot out Livestand for the umpteenth time as an example, unless you want me to start calling it Not-Flipboard–and when will they launch?

* Has Yahoo considered other ownership options that would better reward long-suffering shareholders?

* And, oh yes, China. Let’s not forget about China.

(Although media is not invited to the investor confab, I will be covering it via a live stream Yahoo is offering–you didn’t think I would miss it?)

]]> http://allthingsd.com/20110524/yahoo-preps-for-investor-day-tomorrow-while-investors-prep-for-a-yahoo-grilling/feed/ 0 http://allthingsd.com/20110515/alibaba-and-yahoo-why-cant-we-all-just-get-along/ http://allthingsd.com/20110515/alibaba-and-yahoo-why-cant-we-all-just-get-along/#comments Sun, 15 May 2011 17:06:01 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=62980 A slight–very slight–easing of tensions today in Yahoo’s spat with Alibaba over the Chinese company’s transfer of its Alipay online e-commerce payment system to Alibaba CEO Jack Ma, a move that devalued Yahoo’s 43 percent stake in Alibaba. After a week of accusations, denials and contradictory who-knew-what-and-when statements, the two companies have agreed to talk things out. Below, the joint statement they issued moments ago:

“Alibaba Group, and its major stockholders Yahoo! Inc. and Softbank Corporation, are engaged in and committed to productive negotiations to resolve the outstanding issues related to Alipay in a manner that serves the interests of all shareholders as soon as possible.”

]]> http://allthingsd.com/20110515/alibaba-and-yahoo-why-cant-we-all-just-get-along/feed/ 0 http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/ http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/#comments Fri, 13 May 2011 07:03:58 +0000 Kara Swisher http://kara.allthingsd.com/?p=43899

Back in April of 2009, like all the rest of the parts of the Chinese Internet giant Alibaba Group, its Alipay unit was listed this way on its Web site: “Alipay is wholly owned by Alibaba Group.”

And right now, describing the online payments platform? (my italics): “Alipay is an affiliate of Alibaba Group.”

Memo to Yahoo CEO Carol Bartz: You might have noticed that critical change in Alipay’s corporate status, which happened last August, given the company you lead owns 43 percent of the Alibaba Group.

More to the point, Alipay accounted for $1.7 billion of Yahoo’s valuation.

Not surprisingly, Yahoo shares are down more than six percent in after-hours trading, likely in reaction to an unusual statement by Yahoo yesterday, in which the company said it had no idea until March 31 that Alibaba CEO Jack Ma had transferred ownership of the Alipay unit to a separate entity.

Sources said that apparently happened in a letter from Alibaba to Yahoo’s accounting department. Since then, the company said it has been trying to figure it all out.

Said Yahoo:

On March 31, 2011, Yahoo! and Softbank were notified by Alibaba Group of two transactions that occurred without the knowledge or approval of the Alibaba Group board of directors or shareholders. The first was the transfer of ownership of Alipay in August 2010. The second was the deconsolidation of Alipay effective in the first quarter of 2011.

Yahoo! disclosed this restructuring in its 10-Q after discussions with Alibaba Group and obtaining a better understanding of this complex situation.

Yahoo! continues to work closely with Alibaba and Softbank to protect economic value for all interested parties. We believe ongoing negotiations among all of the parties provide the best opportunity to achieve an outcome in the best interest of all stakeholders.

Translation: Alibaba’s Ma–who cites upcoming new rules about foreign ownership from People’s Bank of China related to operating its payment business–just snookered us and we need to play dumb until we decide whether a lawsuit will be one disaster too many for our much-beleaguered investors.

Really pissed off shareholders is more like it–BoomTown has been on the receiving end of an explosive series of calls from Yahoo’s investors today asking a variety of questions.

They include:

1. How could Alibaba have reported its results with Alipay consolidated in, even though it was a separate entity since last year? And does that spell trouble for Yahoo, since it used those numbers in its own regulatory filings in the U.S.?

2. How could Ma initiate such a transaction without approval from shareholders and its board, as Yahoo claims?

3. In any case, why weren’t Yahoo execs paying more attention to the swirling changes related to foreign ownership in China, especially since Yahoo co-founder Jerry Yang is on the Alibaba board, anticipating that there could be real problems ahead?

4. Why did Yahoo execs not tell shareholders about the situation immediately or even at its April earnings call? Or perhaps before David Einhorn’s hedge fund Greenlight Capital hedge fund took a big position in Yahoo last week, specifically noting the value of the company’s Asian assets as highly attractive.

5. Does this move mean that those pretty Chinese assets Yahoo has touted are not so pretty after all, given that these kinds of things can happen there?

6. Should U.S. investors remove themselves from that Chinese market, given that these kinds of things can happen there?

7. Is Bartz’s extraordinarily tense personal relationship with Ma a big part of the problem, creating a distasteful public feud over issues better left to quiet backroom negotiations?

There will be plenty more, of course, especially around Yahoo’s disclosures to investors.

Yahoo execs will argue that it did disclose in the proper manner from a filing point of view and that it did not reveal the fissure so as not to put its negotiations with Alibaba over the situation at risk.

But–especially given the myriad of continued missteps by Bartz that have worked investors’ last nerve–that probably is not going to fly.

In fact, that irked sentiment will surely be on display at Yahoo’s upcoming investor day on May 25.

Yahoo had hoped to show off its new team of execs and talk about some legitimate momentum the company is making.

Now, it will doubtlessly all be about China and what happened there.

So, Bartz has to have a better line than a take on a Hollywood classic: “Forget it, Wall Street. It’s China.”

Maybe so, but it’s her problem to solve now.

And here’s my favorite version of that line:

]]> http://allthingsd.com/20110513/yahoo-addresses-alipay-mess-forget-it-shareholders-its-china/feed/ 4 http://allthingsd.com/20110511/yahoo-discloses-alipay-stake-restructuring/ http://allthingsd.com/20110511/yahoo-discloses-alipay-stake-restructuring/#comments Wed, 11 May 2011 19:31:17 +0000 Steven Russolillo http://voices.allthingsd.com/?p=40911 Yahoo Inc. disclosed that China’s Alibaba Group has transferred ownership of its online-payments company to a new entity controlled by Alibaba Chief Executive Jack Ma.

Alibaba Group’s management and principal shareholders, Yahoo and Softbank Corp. are “engaged in ongoing discussions regarding the terms of the restructuring” related to the online payment business, dubbed Alipay, according to a filing Tuesday with the U.S. Securities and Exchanges Commission.

The restructuring is necessary to expedite obtaining an “essential” regulatory license, Yahoo said in the filing. Yahoo wasn’t immediately available for further comment.

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]]> http://allthingsd.com/20110511/yahoo-discloses-alipay-stake-restructuring/feed/ 0 http://allthingsd.com/20110221/alibaba-com-ceo-resigns-over-fraud/ http://allthingsd.com/20110221/alibaba-com-ceo-resigns-over-fraud/#comments Mon, 21 Feb 2011 16:14:38 +0000 Yvonne Lee http://voices.allthingsd.com/?p=36591 Alibaba.com Ltd. said Monday that Chief Executive David Wei and Chief Operating Officer Elvis Lee are both leaving the company with immediate effect, taking responsibility for fraudulent activity on one of the company’s platforms.

The company added in a statement that an investigation found that neither the two executives nor other members of senior management were involved in the activity, though nearly 100 of the company’s 14,000 employees are suspected of abetting the fraud, some intentionally. Alibaba said it found a noticeable increase in fraud claims by buyers against certain suppliers on its business-to-business platforms starting in late 2009 and through much of 2010.

Jonathan Lu, CEO of sister site Taobao.com, China’s largest domestic e-commerce website, will now separately run Alibaba.com as well, said John Spelich, spokesman for parent company Alibaba Group. The e-commerce conglomerate, roughly 40 percent owned by Yahoo Inc., also operates online payment system Alipay.

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]]> http://allthingsd.com/20110221/alibaba-com-ceo-resigns-over-fraud/feed/ 0 http://allthingsd.com/20100901/moto-out-apps-apple-in-china/ http://allthingsd.com/20100901/moto-out-apps-apple-in-china/#comments Wed, 01 Sep 2010 14:50:19 +0000 Loretta Chao http://voices.allthingsd.com/?p=29106 Motorola (MOT), which has regained some credibility with the Droid/Milestone and its new focus on Android smartphones, also seems to be trying in earnest to do things right again in China, where it has lost significant market-share in recent years.

Aside from a relaunch Monday of Moto’s hit Ming series in China, the company has started a Chinese version of its application store called Shop4Apps which, unlike Apple’s Chinese App Store, is available in Chinese.

Moto’s application store, which can be used in addition to Google’s (GOOG) Android Market on Motorola smartphones (though the marketplace isn’t preloaded), also accepts payment in Chinese currency and via widely used payment methods in China like AliPay and through prepaid phone cards. Apple’s (AAPL) App Store, meanwhile, requires a dual-currency credit card, which many in China don’t have.

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