Microsoft in $45bn Yahoo bid

At press time, Yahoo China was expected to start laying off approximately 10 per cent of its 1,000-strong staff, and is also believed to be poised to swap senior management with majority owner Alibaba.

Jin Jianhang has reportedly moved from Alibaba to take over leadership at Yahoo China, while Yahoo chairman Zeng Ming is set to move toward a more strategic role in Alibaba. “China has really revealed Yahoo’s problems,” says a source. “It never really found the right formula.”

Market observers point to Yahoo’s loss of its first-mover advantage as a portal, its flip-flopping between branding itself a search engine and a portal, its problematic manage- ment politics and its seemingly desperate tie-up with Alibaba Group, which blurred the brand’s identity.

In China, a deal between Microsoft and Yahoo could pose a threat to Google. While Google reigns supreme elsewhere, Yahoo is stronger in many Asian markets. ComScore data shows Google as the second-ranked search engine in China, well behind Baidu, but ahead of a slumping Yahoo. “Microsoft and Yahoo have such different corporate cultures,” said TVB.com COO and former Yahoo executive Ivy Wong. “In the time it would take (to merge effectively), Google will have had the time it needs to beat Yahoo in Asia.”