What Yahoo, eBay Deal Means for China

From Marketwatch:
By Sage Brennan

Current situation:
Yahoo and eBay announced last week that they will join forces over ads and online payments
Yahoo owns 40% of Alibaba.
Alibaba controls all Yahoo business in China.
Alibaba's "Taobao" C2C auction site and eBay are fierce rivals in China.

"I see two potential outcomes:

Capitulation: The Yahoo-eBay partnership gains steam and leads to further cooperation in the U.S., at which point eBay's China team will realize a face-saving way to throw in the towel and merge eBay China into Alibaba, like Yahoo did last year. As Alibaba's Erisman says, "This deal will not change things in China any time soon, unless eBay wants to just give up, which would be fine with us."

Rescue: When eBay China starts to bleed profusely (which has not yet happened, but seems inevitable, given the current situation), senior eBay management will finally set their reservations aside and allow the China unit to merge with a strong partner. EBay is rumored to be talking to Tencent, Tom Online and others."