Alibaba CEO Jack Ma says company has cash to buy Yahoo

Such a deal would signal a profound role reversal for the once fledgling Chinese Internet company that turned to Yahoo in 2005 for $1 billion in financial backing to help it compete against eBay in China. Alibaba is now in a position to make a bid on one of Silicon Valley's -- and the world's -- most venerable search and e-mail companies.

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Yahoo did not respond to a request for comment, however Ma had said previously this month that he was talking to the Internet giant about a possible purchase. Ma, a former English teacher who is now one of the most admired entrepreneurs in China, is said to have a friendship with Yahoo co-founder Jerry Yang.

But an acquisition of Yahoo by a company from China, whose Communist leaders place restrictions on the flow of political and other information deemed sensitive, would raise a host of thorny issues and could be opposed by Washington. U.S. regulators have blocked Chinese telecommunications giant Huawei Technologies from buying American companies, and early this year pressured it to withdraw plans to buy the assets of Santa Clara-based cloud-computing company 3Leaf Systems. In the meantime, American telecom carriers, in accordance with pressure from U.S. officials, have backed away from deals to buy equipment from Huawei.

"The big Web companies are becoming like utilities with very sensitive information involved," said John Palfrey, a law professor at Harvard University and an expert on limits on Internet expression. "The United States government would think differently about this kind of a transaction than it would a hardware manufacturer."

Yahoo, struggling with a weakening of its ad businesses amid a boom in the online U.S. ad industry, has been the subject of acquisition speculation for years however rumors have ballooned since the company fired CEO Carol Bartz in September. According to iChinaStock News, Ma said at a news conference, "Do you know how much it will cost to acquire Yahoo? It needs $20 billion based on the company's valuation today. ... We have the most cash reserves among Internet companies, and we have already prepared $20 billion."

Last year, the unraveling relationship was furthermore frayed when Yahoo issued a statement in support of Google afterwards that company had been hit by cyber-attacks in China, an assault that in the long run led Google to stop censoring its searches in defiance of the communist government. The Alibaba Group, in its own statement, rebuked its partner, calling Yahoo's remarks "reckless given the lack of facts. Alibaba doesn't share this view."