Yahoo! China shuts down while Chinese journalist freed

Dawn

September 17, 2013

A Chinese journalist was recently freed from jail earlier than expected after being found guilty of sending state-confidential information via email. Previously a reporter and editor of a Chinese newspaper, the convicted was freed 15 months earlier than his slated sentence with unreported reasons.

Shi Tao, an established journalist, was arrested in 2004 after sending out an email using a Yahoo account that contained information about the Chinese local restrictions with regards to media content on a day leading up to the 15th anniversary of the Tiananmen massacre. Subsequently, the details were shared on a New York based website anonymously. The website is themed on democracy advocacy within China.

While tracking the reporter down, Yahoo claimed that it had given Chinese authorities confidential information from Shi’s email account with them as the company felt it was following the law. This crucial information resulted in Shi being sentenced to 10 years imprisonment on the account of leaking state secrets.

On the other hand, Yahoo was not spared. The company’s actions was criticized by many. Amongst them were human rights activists and American litigation officers. The latter even held a separate investigation in 2007 to review Yahoo’s actions during the incident.

Since then, Yahoo’s presence in China has dwindled vastly. The beginning of this month saw Yahoo’s Internet portal going offline. Later on, Yahoo released news that this was part of a bigger strategy by its parent company – the Alibaba Group.

Below is a brief timeline of Yahoo! China:

11 Aug., 2005: 40 percent of Alibaba.com acquired by Yahoo for US$1 billion while Alibaba also takes over Yahoo! China

17 Sep., 2005: Imprisonment of Chinese reporter, Shi Tao, for 10 years after confidential information was revealed by Yahoo. The company stated it was following Chinese Law

18 Sep., 2012: Alibaba Group buys back half of Yahoo’s stake with transactions valued up to US$7.6 billion. This deal allowed Alibaba to continue running Yahoo! China for up to 4 years

19 Aug., 2013: Closure of Yahoo! China email service

1 Sep., 2013: Yahoo! China’s web portal shuts down. The website will now be redirected to taobao.com, a public welfare website under the Alibaba Group

8 Sep., 2013: Chinese democracy advocate, Shi Tao, released prematurely from jail after 8 years in prison

The popularity of Yahoo’s web portal seemed to have declined over the years due to the entry of many popular Chinese Internet companies. Wang Jun, an analyst with the Internet consultancy Analysys International, attributed Yahoo! China’s failure to its inability to cater to its Chinese users.

But, can this be the only root of the issue?

Analysts said that another reason could be Alibaba’s minimal efforts to grow Yahoo! China as the company seemed to be focusing more on its own brands.

For Yahoo, one thing is for sure – its remaining 24 percent stake in Alibaba is much expected to grow exponentially in value as it becomes public within the next two years. Analysts predicted a growth up to US$14 million in worth. As for the Alibaba Group, this acquisition seemed to have provided no gains for the company albeit its initial hefty purchase.

The case in point seems puzzling, but one thing we can definitely learn from the Alibaba Group is that the attainment of big acquisitions does not necessarily equate to big returns.

As for the future of Yahoo! China, it is up to Yahoo’s hard work to re-introduce the brand into the Chinese market once Alibaba finally hands over. If successful, this could really be a window of opportunity for Yahoo to display its prowess. For now, Yahoo was mentioned to be focusing on charity news. With regards to why Shi was released prematurely with unreported reasons at the same period of Yahoo! China’s closure, I sure hope valid reasons will soon surface.