The closing of Yahoo China’s portal is one of the last steps in Alibaba Group’s decision to gradually take down the Yahoo-branded services it operates and comes two weeks after Yahoo’s email service in China shutdown, with users asked to transfer their accounts to Alibaba’s Alimail. In January, Yahoo China ceased its Chinese music service, citing an adjustment to its product strategy. Yahoo paid $1 billion for a 40% stake in Alibaba in 2005, before the company grew into the backbone of China’s rapidly expanding e-commerce market. In September, Alibaba closed an initial repurchase of its shares from Yahoo for $7.6 billion. As part of the deal, Yahoo agreed that Alibaba Group can continue to operate Yahoo China’s brand for up to four years. Alibaba Group’s decision to gradually cease operating its Yahoo-branded properties is a reminder of the struggles that major U.S. Internet companies–including Google, eBay and Amazon–have faced in China due to confluence of factors including government censorship, failure to localize effectively and the rapid rise of Chinese companies like Baidu and Tencent. Yahoo’s remaining 24% stake in the Chinese company, which is expected to go public within the next two years, is estimated to be worth about $14 billion.
