Chinese Web wars flare across the market

Yahoo is testing the $16 level again this afternoon as even once-bullish analysts acknowledge that digging its way out of its dispute with Alibaba is going to be tough.

YHOO (quote) tried to buoy shareholder confidence over the weekend by announcing new talks with its estranged affiliate Alibaba (ALBCF, quote), the so-called “EBAY of Asia.”

However, YHOO is down another 3% today and boutique research firms like Hudson Square are sarcastically pointing out that while the odds of a positive outcome are better now that the companies are talking, negotiations still might not amount to much.

Meanwhile, Baidu (BIDU, quote) is fighting an $85,000 copyright infringement claim — originated, perhaps not coincidentally, by China Web rival Shanda Interactive (SNDA, quote).

It turns out that BIDU’s search engine linked to a few bootleg copies of SNDA’s copyright books, an offense which would normally have been forgiven in order to spare search engines the cost of monitoring every single document they list for violations.

The fine is at the nuisance level for a $45 billion giant like BIDU, but there is not much love lost here between the companies — and traders are snubbing both BIDU and SNDA today.

It is possible that the trap YHOO fell into will damage market confidence in Asian Web stocks for some time to come. Take a look at Renren (RENN, quote), which is now well below its $14 IPO price.

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