The battle between regional tech giants Yahoo and Alibaba heated up as the companies released contradictory statements following this weeks controversial Alipay transfer.
The largest web-portal in the US filed paperwork on Tuesday to the SEC claiming that ownership of Alibaba's Alipay unit had been shifted to another company without Yahoo's approval.
The move enraged Yahoo, which owns a 43 percent stake in Alibaba and an estimated 40 percent share of Alipay. To make matters worse, Aliplay was transferred to a company mostly owned by Jack Ma, the CEO of Alibaba.
But Alibaba fired back today saying that the transfer was legal and 100 percent transparent, rejecting protests from its American partner.
It went on further to say that directors discussed at numerous board meetings over the past three years that China's government was planning new regulatory requirements on the online payment industry that could require a change in ownership structures.
Alibaba said its board was told in July 2009 that majority shareholding in Alipay had been transferred to Chinese ownership to comply with the new Chinese central bank rules requiring local ownership.
Shareholders of Yahoo are up in arms in what seems to be a major move done without proper disclosure. Analysts have contended that the sale diminishes significant value in Yahoo's holdings.
If Yahoo knew of this transaction yet failed to disclose it, for whatever reason, investors could lose faith in other Yahoo disclosures, Jordan Rohan of Stifel Nicolaus told clients.
Yahoo insist that they were notified by Alibaba on March 31, after the transactions occurred. But if that were the case, than it brings to light other problems in the relationship that could be more serious.
If Yahoo did not know about it, trust issues loom even larger, as one could conclude that other material transactions may have occurred and were not disclosed, Rohan explained.
The market sent Yahoo shares down over 4% on Friday.
Ma said Saturday he is less keen on buying back Yahoo's stake in Alibaba after the dispute.