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Will China Save Yahoo From Microsoft’s Embrace?

Written on
Mar 28, 2008 
Author
Sarah Novotny  |
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Will China Save Yahoo From Microsoft’s Embrace?

chinaflag.jpgADOTAS — A new antimonopoly law in China with implications well beyond its borders will likely affect countless future mergers and investments. Currently on the hot seat: Microsoft and Yahoo.

The new law goes into effect August 1 and it is intended to strengthen an existing set of antitrust regulations established in China in 1993, The New York Times reports.

Essentially, regulators in China will be able to review any takeover or acquisition that involves (even peripherally) Chinese companies. Yahoo purchased 40% of Chinese e-commerce business Alibaba.com in 2005 – putting Microsoft’s hostile takeover bid squarely under the microscope.

Chinese regulators could demand that Yahoo sell its investment in Alibaba, but whether China approved the merger or not, a lengthy review of the deal could be a costly and damaging distraction for Microsoft.

Nathan G. Bush, an antitrust law guru with O’Melveny & Meyers in Beijing told the Times that the law represents a seismic shift in power, making it “another regulatory capital contending for influence with Brussels and Washington.”

“Multinational corporations will need to develop strategies for all the markets they operate in,” Bush said, “and China is a big market.”





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