After Chinese Internet giant Alibaba sold off its e-pay division to a newly created company headed by Alibaba’s CEO, its American partner Yahoo threw a fit. It accused Alibaba of selling the division without informing them. After the initial outburst, the two companies announced they would find a solution without splitting the sheets.
Meanwhile, the new company, called Alipay, announced it has received a license from the Chinese government to operate as an electronic payments company, according to The Wall Street Journal.
Last September, China instituted new rules requiring any electronic payment service to be based in China and owned and run by a Chinese company. Yahoo owns 40% of Alibaba.
The license was awarded by the People’s Bank of China, the nation’s central bank.
“The central bank required that all payment-services companies in the country obtain a license to operate,” wrote the Journal’s Loretta Chao, “and that only local entities would be eligible for the license. It said it would clarify rules for foreign-invested companies at a later date, but has not done so yet.”
Given the level of control exercised by the Chinese government over data of all kinds, perhaps it is not surprising that they would wish to control financial data, and the money it represents, as well.
Yahoo and Softbank, another shareholder in Alibaba, are still negotiating with Alibaba to determine their share of the sale of the payment group to the new company. The Journal wrote that Jerry Yang, the Yahoo founder who represents the company on the Alibaba board, met to discuss the situation last week and reported progress.
