Congress's dilemma: When Yahoo in China's not Yahoo

RWB says unless Internet technology firms can agree on a common action plan to resist Beijing's pressures, Congress should impose a code to prevent them from assisting repressive regimes. But the group fears the legislative approach might ultimately be ineffective in Yahoo's case unless the company restructures its strategic partnership agreement.

"Yahoo is trying to use Alibaba as a screen, trying to hide behind Alibaba ... and say, 'Sorry, we can't do anything about this.' " says Lucie Morillon, RWB's representative in Washington, D.C. "If Yahoo succeeds in not being under US jurisdiction anymore and then is able to do whatever it wants, then it sets an example for other companies that want to free themselves from the Western countries they are based in. It looks like a legal trick, but it does not change the issue."

Experts agree that Yahoo's partnership with Alibaba.com seems to throw a roadblock in the path of American regulation.

"It's much harder [to enforce codes of conduct] when the operations of our companies are carried out in other countries by subsidiaries or companies in which they've invested that are chartered in those countries," says John Palfrey, executive director of the Berkman Center for Internet & Society at Harvard Law School. "It's not that there's nothing Congress can do, it's just that it takes more political will."

Some activists say Yahoo could still have to answer for Alibaba.com's actions, perhaps along the lines of antibribery laws that hold parent companies accountable for the actions of their subsidiaries.

Yet because Yahoo only owns a minority stake, Congress would need to raise the bar, experts say. It would have to codify the duties of minority stakeholders in foreign companies. So, as shareholders or board members, Yahoo would need to steer a foreign firm away from assisting governments with practices that constitute human rights violations - or else sell their shares.

"These would be the fundamental rules of engagement: If you [at Alibaba.com] are knowingly giving information that gets a political dissident in trouble, then we [Yahoo] have to walk out," says T. Kumar of Amnesty International in Washington. "If there is a law to that effect, then Yahoo will be held accountable.... They couldn't hide behind Alibaba anymore."

In a statement Monday, Yahoo called for more government involvement. "We believe continued government-to-government dialogue is vital to achieve progress on these complex political issues."

Page: 1 | 2