Yahoo, Alibaba relationship frays under Bartz

Relations between Yahoo and Alibaba Group, which controls Yahoo's China operations, have soured since Carol Bartz took the helm of the online search giant, a source close to the relationship between the companies said Tuesday.

Yahoo owns a 40 percent stake in Alibaba, which runs Web operations including China's top online auction site and, a platform for business-to-business e-commerce.

Bartz has stayed distant from Alibaba since taking over as Yahoo CEO early this year, the source said. That has made Alibaba executives feel she is not interested in nurturing assets outside of Yahoo's main operations, the source said.

During a meeting in the U.S. in March, Bartz told Jack Ma, the CEO of Alibaba, she wanted Yahoo's brand in China back, the source said.

That could be because a sale of Yahoo would be less valuable without its China properties, the source said. Alibaba reportedly sought other investors to buy Yahoo's stake in its firm when Microsoft made its bid for the search firm last year.

Alibaba executives felt snubbed after having no contact with Bartz during her first two months as Yahoo CEO, and again when she did not visit Alibaba during a recent Asia trip, the source said.

"She has done all she can to sour the relationship," the source said.

Meanwhile, Microsoft CEO Steve Ballmer has met twice with Ma in a period when he has also said Microsoft remains open to a deal with Yahoo.

Ma's March meeting with Bartz was part of a trip by Alibaba executives to the U.S. to meet with potential partners including Google and eBay. Ma met Ballmer during that visit and again last week while Ballmer was in Hangzhou, the Chinese town where Alibaba is based.

Yahoo representatives were not immediately available for comment.

Copyright © 2009 IDG Communications, Inc.

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