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Political Climate May Determine Whether Alibaba Group Holding Ltd (BABA) Buys EBay Inc (EBAY)

In the not too distant future, American electronic commerce veteran eBay Inc (NASDAQ:EBAY) may end up right in the crosshairs of Chinese electronic commerce giant Alibaba Group Holding Ltd (NYSE:BABA). Whether that happens has a lot to do with U.S.-China relations.

The comment comes from Porter Erisman, author of the book titled “Alibaba’s World,” in a discussion on CNBC. Alibaba Group Holding Ltd (NYSE:BABA) is at the moment just learning what works in the U.S. but it could decide to buy eBay Inc (NASDAQ:EBAY) to more forcefully enter the country in the future, the author suggests.

According to Erisman, his guess is that Alibaba Group Holding Ltd (NYSE:BABA) is going to learn from the experience of their battle with eBay Inc (NASDAQ:EBAY) back in the day where eBay tried to come in to the China market and apply their business model to China and it just didn’t work.

“[…] The e-commerce model of the U.S. doesn’t work in China and probably the China model won’t work perfectly in the U.S. So I expect they will take some small positions in companies [and] learn about the market. One of the things I say in the book is if the political conditions are right, I think acquiring eBay would probably be a pretty bold move and a good fit for them,” Erisman says.

The author also revealed in the discussion on CNBC that Alibaba has been very open in the early days about letting people come in and film the company. That first day in their apartment when Jack Ma, the founder of Alibaba, gave his first speech to the founders of Alibaba and someone said, “We ought to film this.” shows this openness, Erisman says, though it may seem a little bit megalomaniacal at this point.

There is a hindrance, however, to a possible Alibaba Group Holding Ltd (NYSE:BABA) acquisition of eBay Inc (NASDAQ:EBAY), Erisman says.

“I think it’s a perfect fit. The big question is geopolitics. Will the U.S.-China relationship allow it? That may actually prohibit it from happening. For the most part, the government was pretty hands-off. People were surprised to find that. E-commerce was something the government encouraged but now they are kind of bumping against the government a bit. I think it is healthy. It means they are pushing the frontier,” the author explains.

In terms of acquisitions of U.S. companies, Alibaba just recently acquired a 9% stake in Zulily Inc (NASDAQ:ZU) for $56.2 million.

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By the end of the last quarter of 2014, Rob Citrone’s Discovery Capital Management owned about 9.25 million Alibaba Group Holding Ltd (NYSE:BABA) shares. Also by the end of 2014, William B. Gray’s Orbis Investment Management owned about 17.64 million eBay Inc (NASDAQ:EBAY) shares.

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