Microsoft CEO Steve Ballmer met last week with Jack Ma, the CEO of top Chinese e-commerce firm Alibaba Group, which controls Yahoo's operations in China. The meeting drove speculation in China that they may have discussed a potential Microsoft acquisition of Yahoo.
The two met Friday in the scenic Chinese city of Hangzhou, where Alibaba is based, a Microsoft representative said Monday. Ballmer was in town to announce a separate intellectual property agreement with the local government.
A spokeswoman for Alibaba, Christina Splinder, also confirmed the meeting, but both she and the Microsoft representative declined to provide further details.
News outlets in China, however, latched onto the meeting as a sign Microsoft is again courting Yahoo. Several Chinese news sources said the meeting may have concerned a possible Microsoft acquisition of Yahoo, including Web portals Sina and Tencent.
Alibaba had posed a possible problem for Microsoft in its failed US$44.6 billion bid for Yahoo last year. The Chinese Internet company feared a Microsoft takeover of Yahoo, its largest shareholder, might mean the end of its independence and had reportedly sought other investors to buy out Yahoo's stake.
Such a deal would have meant Microsoft would get Yahoo without any China properties.
Yahoo holds a nearly 40 percent stake in Alibaba, which in turn controls Yahoo's operations in China. Alibaba's subsidiaries include the Alibaba.com business-to-business commerce site and Taobao, dubbed "China's eBay."
The meeting between Ballmer and Ma last week is the second in just a few months.
Ma and other Alibaba executives met Ballmer in March during a visit to the U.S. that also included talks on potential cooperation with firms like Yahoo, eBay and Google, said Splinder.
Ballmer visited Hangzhou on Friday to announce a cooperation with the municipal government on intellectual property protection and software outsourcing.
Microsoft and Hangzhou will establish a base for cloud computing technology development as part of the three-year deal.
The two will also open a center to cultivate the city's IT industry and help implement the deal's programs, which include a marketing campaign and education in schools about the importance of intellectual property rights.
In turn, the Hangzhou municipal government will work with Microsoft to encourage companies, schools and government agencies to use licensed software. Organizations and consumers in China often use pirated versions of Windows and Microsoft Office.