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]

Doggedly committed to the company he co-founded, Yang joins us today as a Yahoo director — ironically, one facing many of the same obstacles that confronted him back in 2008. One bright light amid the darkness: Yahoo’s massive and successful business interests Asia, currently overseen by Senior VP Rose Tsou, who joins Yang on the D stage today.

7:57 am: Good morning from Hong Kong. Yahoo’s Jerry Yang and Rose Tsou will be on stage shortly.

In the meantime, I can report that we’re playing Stray Cats in the ballroom here at the Grand Hyatt.

And now, some Devo. Perhaps at some point we’ll move to non-80s music. And if so, I’ll advise.

The Devo’s pretty good, though. If you want to play at home, enjoy.

8:03 am: And here’s Walt Mossberg. (Who walks onstage to Van Halen)

Walt delivers an update on Kara. She’s doing just fine, as you can tell if you follow her Twitter account.

Walt starts out with a D tribute to Steve Jobs. “I personally believe he’s a historical figure. Somebody who will be remembered alongside Ford and Edison.”

Walt talks about Jobs agreeing to come to the first D conference, and four more following. The last year, “he looked extremely frail — I think a lot of people were concerned.” And then he spoke with great vigor for an hour and a half.

“He’s been a terrific supporter of AllThingsD. That doesn’t mean he wouldn’t complain. That doesn’t mean he wouldn’t try to get us not to talk about things, and we would say no, and he would knock it out of the park anyway.”

8:08 am: And now, Jerry Yang and Rose Tsou.

Some discussion of Kara’s health and great affection for writing about Yahoo. Walt notes that Kara filed a couple Yahoo stories while en route to the hospital Wednesday.

8:10 am: Walt: Tell us about the status of the CEO search.

Jerry: There’s a search and a search committee. “I think the board is pretty excited about the prospects, about the way we can invigorate the company, and the search process is one of them.”

Looking at all the options, both for Yahoo, and a prospective CEO.

8:12 am: Walt: How do you look for a CEO while you’re putting yourself up for sale?

Jerry: “The board works for the shareholders, and anything that benefits the shareholders, the board has to listen to.”

8:13 am: So what are some of the real options: A sale, and what else?

Jerry: Yahoo has a great core business “and I feel like we’re making great progress.” Great brand, 700 million users, etc. “It is the thing that everybody is looking at, and saying, “how do we invigorate growth around that?”

And we have investments with Softbank in Yahoo Japan, and here in China with Alibaba. Very valuable.

8:14 am: Walt: That’s the most important asset, according to Wall Street.

Jerry: Yes, there are plenty of options.

Walt: But you need to decide what you are. Last time you were here in 2008, I asked you and Sue Decker “what is Yahoo”? And to be honest, you guys had a lot of answers, but not a crisp answer, like Steve Ballmer or Steve Jobs or Larry Page would have.

So let’s try another version. “Why should 700 million keep going to Yahoo?”

8:16 am: Jerry: Everyone who works at Yahoo gets what we want to do — “we want to be the premier digital media company.”

8:16 am: Walt: Are you that now? Because I think people might say YouTube, or Apple, or Amazon…

Jerry: Yes.

Walt: Really?

Jerry: Sure.

Walt: Give me examples.

Jerry: You can watch videos, for instance, we’ve also got news, finance, sports, entertainment. “We’re probably category leaders across the spectrum, in different regions.” Yahoo Mail is big.

Walt: But hasn’t Yahoo Mail gone down?

Jerry: Yes, people think Yahoo Mail is declining, but the number of messages is up, engagement is up. Web-based mail is being replaced by mobile and other devices. But the fundamental back-end proposition that we offer is stronger than ever.

8:18 am: Rose: People come for Yahoo news, or finance, and they discover other stuff, like videos. A couple of weeks ago, we launched a premium video consumption site in the U.S. In India, where there’s low-bandwidth access, video and entertainment are very big for us.

Providers want to be on our platform, because of our reach, all over the world.

8:20 am: Walt: Jerry, do you have all the Hollywood and big media deals you need to make this happen?

Jerry: If you look at the media part, we’ve evolved from being a pure aggregation play to “having a voice.” We’re creating “color” around other people’s stuff, and we’re making our own. Like last week, when we were the exclusive streamer for the Bill Clinton concert.

Yahoo Sports “is a very well-known service in the United States that routinely breaks news now.”

8:21 am: Walt: Do you need to move more into video, etc.? Sports is big for you but you can’t watch sports on Yahoo.

Jerry: At the end of the day, if you look at what Yahoo’s been for past 15, 16 years, the part we have to sharpen is distributing content for our partners. Outside the U.S., we’ll definitely be distributing TV. In the U.S., less of that, but note our (most recent) partnership with ABC News.

In Silicon Valley there’s one view. But the reality is Yahoo is doing lots of those things.

8:23 am: Walt: Back to the review. What’s the best outcome. Would it be best if Jack Ma bought the whole thing?

Jerry: You’d have to ask him.

Walt: I’m asking you.

Jerry: As the founder, “the true ambition for me is to see Yahoo achieve the potential it’s in the position to achieve.”

I think that’s what the board and management are trying to do.

Walt: So can an entrepreneur like Jack make that happen?

Jerry: We’re looking at everything.

Walt: Do you want to be in the hands of a PE company?

Jerry: I don’t know, Walt. I think all of the options will work themselves out.

8:25 am: Walt: OK. The Microsoft deal, where at one point they were going to buy you, and then it became a search deal. It seems like it hasn’t caught fire and done as much for you as you’d hoped.

Jerry: “I think Microsoft is a very very important partner for us.” We’ve extended our revenue guarantee. But we both realize this has to work for both sides. “It takes trial and error. It takes work. I will probably venture that the Microsoft folks would say the partnership hasn’t gone the way they wanted.”

Walt: Meanwhile other people keep nudging into search. Even Apple’s Siri can represent search.

Jerry: Our focus is simple. We can control the way our users conduct a search. We’ve gotten very good at that. Microsoft is responsible for the back end, and for monetization. And the core focus is monetization. So there will be innovation about the way you find search, and define search, but really the core focus is on monetization, and we can’t help Microsoft much with that.

8:29 am: Walt: Rose, let’s talk about Asia. How important is Asia to Yahoo and consumers as a whole?

Rose: Very important! And growing! Between southeast Asia and India, in the next three years, there will be 100 million users coming online.

Walt: Primarily through mobile, right?

Rose: Yep. And not the smartphone we’re used to, but the $50 feature phone.

Walt: But as you know, smartphones will get even cheaper.

Rose: Yes, and a $100 feature phone now functions much like a smartphone.

Walt: So are you building features for that market segment?

Rose: Absolutely. For starters, we have to make sure media and communication products render well on those phones. And then we have to work on discoverability. People have to find your services. So we do a lot of partnership deals with chipset deals, and handset manufacturers, for instance.

Walt: How does a chipset deal help media discovery?

Rose: Great question. For example, we did a deal with a chip company so the media discoverability is sort of baked into the middleware. So when they pass on the chips to handset makers, it’s that much easier. In the feature phone market, lots of local makers are very happy to have brands like Yahoo baked onto the chipset market. We’ve gotten great feedback from manufacturers in India, Indonesia, China.

8:34 am: Walt: Jerry, there was a good story in the Asian WSJ the other day, tied to Steve Jobs’s death. It wanted to know about the Steve Jobs of China, and whether China was able to harness the energy and wonderful companies and services you have here, “but a lot of it is considered derivative” — they iterate on ideas that originate in the U.S. or elsewhere. Jerry, “what’s the deal there?” Do you think that’s right? When will China “startle the U.S.” by thinking up its own stuff?

Jerry: Two sides to that. I’m an optimist about China and Asia. “It’s just a matter of time… before true innovation comes. Now, it’s just not fair comparing it to Steve. He’s rare even for the U.S.”

Walt: I know. But he did lots of great world-changing things, and it’d be nice if a Chinese entreprenuer did one.

8:37 am: Jerry: “This is a statistics and probability question.” The number of people with technical training, and a Western education and understanding of how platforms work, and experience. Even compared to 10 years ago, management has so much more experience.

Still, there are challenges. “This is not a foregone conclusion.” There’s a question about how does media censorship affect creativity and entrepreneurial spirit. We don’t know yet.

8:39 am: Walt: I’m sure you remember that 20 years ago, it seemed like Japan was going to surpass the U.S., and there was a lot of government organization around that. But it didn’t happen.

Jerry: Please understand. “I’m not saying that China is going to overtake the U.S.” — there’s still a tremendous amount of advantage that Silicon Valley, or New York, or whatever, has with entrepreneurial culture, etc.

8:40 am: Rose: It’s harder to do breakthrough stuff here because the market is really big, and the competition is really fierce. “So I think there is less risk-taking, in going about doing something that’s never been proven elsewhere.” It’s more natural to see what works somewhere else, and replicate that.

Walt: Like those fake Apple stores they have in China.

Rose: Yep. On the other hand, the speed of iteration they have here is amazing. So they take a concept from the West, but they move so fast, that soon it’s a different thing.

8:42 am: Q&A:

Q: As you look at what Yahoo could be, what are the one or two key areas that it could go after to truly transform itself?

Jerry: We’re really focused on trying to “turn Yahoo inside out.” We do a huge amount of services internally: Data, content, personalization. Lots of other people on the Web around the world could use that.

Also, there are going to be multiple platforms: iOS, Android, maybe Microsoft. And we have to be able to play on all of them. And that’s an opportunity for people like us, who can distribute a large amount of content and services.

But this “inside out” idea is a big one.

8:45 am: Q: (via Eric Jackson): Your media answer reminds me of your vision 10 years ago, with Terry Semel, and Lloyd Braun, etc., that you backed down from. What did you learn then and how is that affecting what you’re doing now?

Jerry: The realization is “that we have to continue to disrupt ourselves in terms of how we distribute.” So just publishing on Web pages and HTML, and don’t pay attention to apps, and mobile, and social media, and we’re not being disruptive, then that won’t work. People think that media means you have to stream or pipe data. But it can be more than that. Ten years ago, we didn’t really focus on that disruptive element — “we just tried to put TV on the Internet.” And some of that worked, but some of that didn’t.

And we’re done — though as Jerry walks off stage, he tells Walt “I passed.”

Now, off to a demo from digital camera-maker Lytro.

So why Asia? It seemed the most obvious choice for us, as we looked at the global landscape for tech. While the whole world has now been engulfed in the powerful trends of digitalization, perhaps nowhere else has been as important a place for understanding where it is headed next than this region, which is home to companies critical to the next phase of innovation.

There’s no question that Silicon Valley, which has been the base for most of the key players — such as Google, Apple, Facebook and more — has driven the digital revolution over the past decade. But as we look out onto what’s to come, it’s clear to us and many others that what’s coming next and even the next great company might be born here.

That’s why we have created a conference that mixes both important speakers from U.S. tech and also from all over Asia.

Given that smartphones are 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 Internet giant to dominate the important sector across the world.

Speaking of domination, Alibaba Group’s Jack Ma efforts to make the company a powerhouse in China and elsewhere are hard to ignore. His recent tussle and interest in Yahoo, 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.

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.

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.

Kazuo “Kaz” Hirai is widely considered the second in command at the consumer electronics giant Sony, in charge of its key computer entertainment division, as well as now serving as executive deputy president of the whole company. As Sony struggles to reassert its dominance in tech, Hirai will be a key player in that effort.

Bradley Horowitz — as head of product management for Google+, the search giant’s aggressive effort to break Facebook’s hammerlock on social networking — has a perfect perspective to talk about the fast-growing area and where it is going globally. With locally-based social companies springing up all over Asia, can Google establish one the whole world will use?

At Microsoft, Andy Lees is leading one of the software giant’s most important initiatives, as president of its Windows Phone division. His come-from-behind-Google-and-Apple job includes mobile software and hardware, as well as its key partnership with Nokia, and Lees will need to win in markets globally, especially in Asia.

Peter Chernin is one of Hollywood’s top players and execs. But he’s also been increasingly active in media investing in Asia of late, and has a lot to say about the global nature of entertainment in the digital age.

John Roese heads the North American R&D team for Huawei, the Chinese telecom giant making everything from heavy-duty gear for networks to mobile phones and tablets. Roese will also talk about the phenomenon of a Chinese-owned company emerging on the world technology stage.

We also felt that it was important to hear from Silicon Valley start-ups, which have enjoyed unprecedented growth and funding in the Web 2.0 era. But as they seek to expand beyond the U.S., a critical move for them all, we’ve assembled a panel of entrepreneurs to discuss it, including: Brian Chesky, CEO and co-founder of Airbnb, the popular online vacation rental site; former Google exec Sukhinder Singh Cassidy, who is running the recently funded Joyus, a new premium video commerce site trying to pioneer a new way to shop online; and David Goldberg, who is now running one of tech’s most successful start-ups at SurveyMonkey, the dominant online survey company.

Yahoo co-founder and former CEO Jerry Yang, who will appear with the Internet giant’s Asia head Rose Tsou, needs little introduction. For all of the noise around the company these days, Yahoo has a huge footprint in the region, maintains a big e-commerce business there and holds massive stakes in key firms, such as Yahoo Japan and China’s Alibaba.

And so does LivingSocial, whose CEO and co-founder Tim O’Shaughnessy, who will appear along with founders of two of its Asian units, Daniel Shin and Paul Srivorakul, which the daily deals site just bought as part of its aggressive move into Asia.

Because of Samsung’s increasing importance as a global player in smartphones and tablets, it was natural to invite Dr. Won-Pyo Hong, who heads global product strategy for the Korean giant’s mobile business. That has surged in the past year to make Samsung a leader in Android-based phones and tablets, and a significant challenger to Apple.

Also key in the mobile arena is Cher Wang, chairman of HTC, the important and innovative handset and tablet maker which has been a key player in Android’s success story. Add to that HTC buying an operating system, which would further strengthen its hand in the competitive market, and it’s clear it is in a pole position on the critical mobile market going forward.

Finally, we are also glad to bring back Al Gore, who had a memorable interview at the fourth D: All Things Digital conference in 2006. The former VP and Nobel Peace Prize winner is now chairman of Current TV and also continues as a prominent environmental activist. He is also on the board of Apple, while also being a senior adviser to Google, as well as a partner in the famed Silicon Valley venture capital firm, Kleiner Perkins.

In total, along with some very cool demos to show off, it’s going to be an exciting AsiaD, and we are thrilled most of all to welcome our first international audience. So get ready for a busy three days here and we hope you will like what we have to show you.

And then there was Schiller and Gore.

That would be Apple’s SVP of worldwide product marketing Phil Schiller and former Vice President Al Gore, who round out the stellar list of speakers at our upcoming AsiaD conference.

Taking place from Oct. 19 to 21 in Hong Kong, the lineup is already impressive, with a mix of speakers from China, Japan, Korea and Taiwan, as well as Silicon Valley and elsewhere.

The previously announced speakers include: Alibaba Group’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; Asus Chairman Jonney Shih; Sony president and second-in-command Kazuo “Kaz” Hirai; Google+ guru Bradley Horowitz; Hollywood big shot Peter Chernin; Huawei’s North American R&D head John Roese; Microsoft’s Windows Phone head Andy Lees; and a panel of Silicon Valley start-up stars — Joyus’ Sukhinder Singh Cassidy, SurveyMonkey’s Dave Goldberg and Airbnb’s Brian Chesky; Yahoo co-founder Jerry Yang and Asia head Rose Tsou; LivingSocial’s Tim O’Shaughnessy, along with founders of two of its Asian units, Daniel Shin and Paul Srivorakul; Samsung mobile head Dr. Won-Pyo Hong; HTC CEO Peter Chou, who replaces Chairwoman Cher Wang.

Schiller, who reports to Apple’s CEO Tim Cook (and before that, Steve Jobs) is a member of the executive team of the tech icon, where he has worked for 17 years. He is responsible for a swath of Apple’s outward-facing businesses, including product marketing, developer relations and business marketing.

Today, in fact, he was onstage at Apple’s iPhone event, outlining some of its new product offerings. In addition, Apple just opened its first retail store in Hong Kong.

Gore, who had a memorable interview at the fourth D: All Things Digital conference in 2006, needs little introduction. The former VP and Nobel Peace Prize winner is now chairman of Current TV and also continues as a prominent environmental activist.

Gore is on the board of Apple, while also being a senior adviser to Google, which is a neat trick. At the same time, he is a partner in the famed Silicon Valley venture capital firm, Kleiner Perkins, and co-founder and chairman of Generation Investment Management, a partnership that is focused on sustainable investing.

And, as most people know, he knows a thing or two about the Internet.

Walt Mossberg and I could not think of two better people to add to the lineup we have for AsiaD, which has very few seats left.

See you in China in two weeks!

After his unusually enthusiastic declaration at a Silicon Valley event last week that “we are very, very interested” in buying the “whole” of Yahoo, you might imagine Alibaba Group co-founder and CEO Jack Ma running out of the speech looking for a giant pile of cash to pay for it immediately.

Instead, according to sources close to the situation, what the Chinese entrepreneur got was a cold dose of CFIUS — or Committee on Foreign Investment in the United States, the federal interagency review process for foreign investment deals.

Translation: If you are from China and want to buy our U.S. companies, we are going to have to give you a major look-see and it is not going to be pretty.

Perhaps that’s fair, but the prospect that even a purchase such as Yahoo, a consumer business that seems to have little in the way of national security concerns, might enter the buzzsaw of U.S. politics apparently surprised Ma.

Thus, sources said, that while it remains very interested, Alibaba is now at least a little concerned about the feasibility of the deal and that Ma is “perplexed” about why the U.S. has such restrictive rules against foreign ownership of a consumer business.

That said, he has been in touch with Yahoo co-founder and board member Jerry Yang and is likely to make a more official visit soon with others involved in Yahoo’s strategic review.

In addition, sources said, rumors of an imminent Yahoo bid hook-up with DST Global and Silver Lake — which recently invested in Alibaba — are overblown. While Ma did say last week at his much-noticed speech at Stanford University that he was talking to a lot of buyers, Alibaba is not closely aligned with anyone as yet.

Of course, given that Yahoo owns a 40 percent stake in Alibaba, Ma will be a big player in any deal done.

That’s because of a 2005 agreement that stipulates that if there is a change of control, Yahoo must give Alibaba a 15-day chance to buy back its stake.

Still, after his effusive I-want-Yahoo-now speech that caught the Internet giant and its bidders off guard, dialing back the rhetoric a bit is probably no surprise given the delicate dancing now going on.

In other words, a case of wanna-be-buyer’s remorse.

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.

With AsiaD just a little over a month away, Walt Mossberg and I are adding even more speakers to the list, for what we hope will be an awesome event in Hong Kong.

Taking place from Oct. 19 to 21, the conference lineup is already impressive, with a mix of speakers from China, Japan, Korea and Taiwan, as well as Silicon Valley and more.

The previously announced speakers include: Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; Asus Chairman Jonney Shih; Sony president and second-in-command Kazuo “Kaz” Hirai; Google+ guru Bradley Horowitz; Hollywood big shot Peter Chernin; Huawei’s North American R&D head John Roese; Microsoft’s Windows Phone head Andy Lees; and a panel of start-up stars — Joyus’ Sukhinder Singh Cassidy, SurveyMonkey’s Dave Goldberg and Airbnb’s Brian Chesky.

Now, to add to the kitty:

Yahoo co-founder and former CEO Jerry Yang, who will appear with the Internet giant’s Asia head Rose Tsou. For all of the noise around the company these days, Yahoo has a huge footprint in the region, maintains a big e-commerce business there and holds massive stakes in key firms, such as Yahoo Japan and China’s Alibaba. One of Yahoo’s first big investments came from Asian investor Masa Son, in fact, way back when.

Also on deck is LivingSocial’s CEO and co-founder Tim O’Shaughnessy, who will appear with Daniel Shin, the CEO and co-founder of South Korea’s Ticket Monster, which the daily deals site just bought as part of its aggressive move into Asia. Competing there with its U.S. rival Groupon, as well as a myriad of local social buying services, the market is a tough one.

Because of Samsung’s increasing importance as a global player in smartphones and tablets, we thought it was important to have Dr. Won-Pyo Hong. He heads global product strategy for Samsung’s mobile business, which has surged in the past year to make the Korean tech giant a leader in Android-based phones and tablets, and a significant challenger to Apple.

Also key in the mobile arena is Cher Wang, the chairwoman of three Taiwan companies, including HTC, the important and innovative handset and tablet maker which has been a key player in Android’s success story. But just this week she talked about the possibility of HTC buying an operating system, which would further strengthen its hand in the competitive market.

That’s it for now, but we will have more big names to come, as well as some pretty cool demos we will be putting onstage at AsiaD. So stay tuned.

After our grand tour of Asia last week — with stops in Korea and Japan — it seems like a perfect time to update the speaker list for our upcoming AsiaD conference in Hong Kong in October.

As Walt Mossberg and I said, we are trying to mix both U.S.-based speakers with a pan-Asian selection of speakers from across the region, and the new additions are just that.

For the international confab — this one will be held Oct. 19-21 — we’ve already announced a great lineup, including Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; and Asus Chairman Jonny Shih.

Now, to add to that terrific lineup:

Kazuo “Kaz” Hirai is widely considered the second in command at the consumer electronics giant Sony, in charge of its key computer entertainment division, as well as now serving as executive deputy president of the whole company. In that role, the dynamic exec is at the nexus of the Japanese company’s efforts around tablets, smartphones, gaming and more. As Sony struggles to reassert its dominance over the arena, Hirai will be a key player in that effort.

Bradley Horowitz — as head of product management for Google+, the search giant’s aggressive effort to break Facebook’s hammerlock on social networking — has a perfect perspective to talk about the fast-growing area and where it is going globally. With locally-based social companies springing up all over Asia, can Google establish one the whole world will use? It’s an important question and Horowitz’s job No. 1.

At Microsoft, Andy Lees is leading one of the software giant’s most important initiatives, as president of its Windows Phone division. His come-from-behind job includes mobile software and hardware, as well as its key partnership with Nokia. With Apple’s iPhone and Google’s Android far in the lead, Lees will need to win in markets globally, especially in Asia.

Peter Chernin is one of Hollywood’s top players and execs. The former top News Corp. exec is now a movie producer — his first effort, “Rise of the Planet of the Apes,” is a big hit. But he’s also been increasingly active in media investing in Asia of late, and has a lot to say about the global nature of entertainment in the digital age.

John Roese heads the North American R&D team for Huawei, the Chinese telecom giant making everything from heavy-duty gear for networks to mobile phones and tablets. The former CTO of Nortel, he’s heading up global development of Huawei’s cloud services for both businesses and consumers. Roese will also talk about the phenomenon of a Chinese-owned company emerging on the world technology stage.

Even in the midst of an economic downturn, there is no denying that it has been a golden time for Silicon Valley start-ups, which have enjoyed unprecedented growth and funding in the Web 2.0 era. But as they seek to expand beyond the U.S., a critical move for them all, we’ve assembled a panel of entrepreneurs to discuss it, including:

Brian Chesky is the CEO and co-founder of Airbnb, the popular online vacation rental site that recently got a huge dose of funding and an equally large amount of controversy. How Airbnb can take the company to the next level, including across the world, while dealing with the kinds of challenges the small management team has to face, will be an interesting topic for discussion.

After stints as president of Asia Pacific and Latin America operations at Google and co-founder of the online personal finance company Yodlee, Sukhinder Singh Cassidy is trying her hand at a small start-up again. She’ll talk about how the recently funded Joyus, a new premium video commerce site trying to pioneer a new way to shop online, plans to expand globally.

Finally, longtime tech exec David Goldberg is now running one of tech’s most successful start-ups at SurveyMonkey, the dominant online survey company. With stints as founder of music site Launch Media, which was bought by Yahoo, and as an Entrepreneur in Residence with Benchmark Capital, he is the perfect person to explain what it’s like being an entrepreneur today in Silicon Valley.

We have even more speakers for AsiaD we’ll be announcing in the coming weeks, so get ready for what’s next.

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

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

In an interview I did with him at the recent ninth D: All Things Digital conference, Alibaba Group CEO Jack Ma suggested that Yahoo would be better off splitting itself up into smaller pieces.

Today, he did that for one of the key units of the Chinese Internet giant, cleaving its Taobao e-commerce unit into three new companies.

Said Alibaba:

Alibaba Group is reorganizing Taobao into three separate companies to capture the Chinese consumer e-commerce opportunities. Effective June 16, 2011, the three companies, which remain wholly-owned subsidiaries of Alibaba Group, will begin operations as: Taobao Marketplace (www.taobao.com), China’s leading consume-to-consumer (C2C) platform; Taobao Mall (www.tmall.com), China’s leading business-to-consumer (B2C) shopping site; and eTao (www.etao.com), a product search engine designed to make it easier for consumers to find goods and services offered by all e-retailers.

We believe this move will benefit our customers, as each of the three companies will be able to focus on its own unique consumer experience. The board of Alibaba Group is fully behind this decision, as the move will create more value to shareholders by fostering innovation and capturing more opportunities in China’s fast-growing e-commerce sector.

Interestingly, the move means no massive IPO for Taobao, which some investors have been hoping for.

Here is Alibaba CEO Jack Ma’s email to employees on the change:

Ma Letter on Taobao Reorg –

AllThingsD has gotten a lot of requests for the full interviews from the ninth D: All Things Digital conference, which took place last week.

It was indeed a crackerjack series of tech and media top players on stage, as well as a handful of amazing demos (more grilled cheese please!).

And, as promised, we’ll start posting them in their entirety, starting some time next week. We already posted one I did with Alibaba Group CEO and co-founder Jack Ma over the weekend, to get those interested in our upcoming AsiaD conference in October in Hong Kong familiar with our style.

Until we start posting the interviews — including the comedy stylings of Groupon CEO Andrew Mason, sayings from Google Executive Chairman Eric Schmidt, Disney CEO Bob Iger trying to get me to go to his theme parks again and more — you can read some of the transcripts here in this special Wall Street Journal section from earlier this week.

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: