6 April, 2006

the trials of yahoo!

AsiaPundit has spoken with Yahoo staff who believed that the transfer of the company’s China operations to Alibaba would prevent the company being implicated in any further unsavory behavior and would limit further bad publicity.

That may have been naive.

Via Glutter, Marketwatch reports on a .:

 ShitaoHONG KONG (MarketWatch) — The family of a Chinese journalist jailed for leaking state secrets is considering legal action against U.S. Internet portal Yahoo Inc. (YHOO) for its alleged role in providing information to authorities that led to his conviction, a Hong Kong lawyer said Monday.

"We are looking at taking legal action against Yahoo for providing information on Shi Tao to the Chinese government," said Albert Ho, who is representing the jailed journalist as his Hong Kong-based attorney. Ho also is a pro-democracy legislator and frequent critic of China’s communist government.

Ho said he is working with Shi’s mainland China lawyer to collect evidence in determining whether civil charges can be pressed against Yahoo at its headquarters in California or in Hong Kong.

As well, a Hong Kong legislator is going after the company for allegedly violating basic law.:

According to the AP, a Hong Kong lesislator has evidence that it was Yahoo’s Hong Kong branch that provided the information to convict a reporter, not the China branch. The Hong Kong branch does not have the same legal relationship with the government that Yahoo has insisted its Chinese operation does.

AsiaPundit has heard from people at or close to the company that no warrants were served on the Hong Kong office - which had remained ignorant of the situation on the mainland in regards to warrants or requests from Chinese authorities. The company said something similar before Congress.  So it seems unlikely that the company violated any Hong Kong law.

As well, AsiaPundit questions whether the company can be sued by Shi Tao’s family in Hong Kong for abiding by Mainland law. It seems very unlikely.

Still, given the bad press that this could cause the company, AsiaPundit would advise Yahoo! that the matter be settled quietly.

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by @ 7:32 pm. Filed under China, Asia, East Asia, Northeast Asia, Media, Censorship

One Response to “the trials of yahoo!”

  1. Will Says:

    I think the idea that handing over China ops to Jack Ma would insulate them from risk *was* naive. In fact, I think the opposite is true. I think it exposes them to increased risk. They’ve given sovereignty over their brand in China to a man who, in the words of an experienced Chinese colleague of mine, most likely thinks problems Yahoo has in the US are little concern of his. No one outside the company knows how much influence Yahoo corp has over Jack Ma’s actions with the brand in China, but I’d suggest not a whole lot.

    As for Americans, they don’t give a damn who is in operational control. They see the Yahoo brand as monolithic, which means they’ll hold Yahoo in Mountain View accountable for whatever happens to Yahoo in China, even if it is owned by Alibaba. Furthermore, as long as Yahoo owns a significant stake (even a minority) in Alibaba, they run risk by association for whatever happens in China. But it’s the brand that’s a real killer.

    The question is, then: How do Jack Ma’s and Alibaba’s long term interests in China align with those of Yahoo globally, and what risks does that suggest?

    In a way, Yahoo may be in the worst position possible here. They’ve surrendered control of the brand to a Chinese entity in return for a non-controlling interest paid in cash (I believe). Even if reputational damage tanks Yahoo’s stock, it may not mean much to Alibaba. (I don’t know the facts here, so this is speculation.)

    And it isn’t whether Alibaba plans on doing anything sinister. Obviously, they don’t. All they want to do is to run the most successful business possible. But sometimes that objective may present a reputational risk to Yahoo in the US, especially with the scrutiny on US Internet companies in China right now.

    If I were Yahoo, I’d be concerned, and keeping an eye on this.

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