A purchase of popular Taiwanese blog site Wretch.cc by Yahoo Taiwan Inc. will not adversely affect competition in the local Internet market, Taiwan's Fair Trade Commission ruled Thursday, paving the way for the completion of the deal.

Rivals of Yahoo Taiwan, which operates the most popular portal and online auction site on the island, had petitioned the Fair Trade Commission (FTC) to stop the acquisition on the grounds that it would give Yahoo Taiwan the power to control Internet advertising rates. They had also argued that Yahoo Taiwan already holds a large share of the local Internet market, and that the deal would help it consolidate its hold on auction activity.

But the FTC found that Yahoo Taiwan's share of the local Internet market, estimated at between 57 percent and 59.54 percent, will rise by only 1.75 percent at most from the purchase of Wretch.cc., and that their businesses do not overlap. Wretch.cc, which allows users to post pictures and open blogs, and video blogs, does not engage in any kind of auction activity.

The ruling removes the last major hurdle to a deal between the two companies. Local reports value the deal at NT$700 million (US$21.2 million), but Yahoo Taiwan has not revealed the figure and declines to comment on the actual amount.

Wretch.cc is the most popular site in Taiwan offering Web services broadly defined as Web 2.0, which entails mixing user-generated content and multimedia applications such as video. The site offers blogs, video blogs and photo albums, and had announced plans to expand to video publishing similar to YouTube Inc. this year.

Teaming up with Yahoo will help it invest in new services and give its users access to Yahoo technology and resources, the company has said. Wretch.cc, with around 2.8 million [m] members, will continue to operate independently, it said.

Finalizing the deal will also count as another major Yahoo move in Asia, where U.S. Internet companies have had a tough time attracting users on their own. Yahoo Taiwan grew out of Yahoo's 2000 purchase of Kimo.com, the most popular portal on the island at the time. And last year, Yahoo agreed to pay $1 billion in cash and transfer all of its Chinese businesses to Alibaba.com Corp. for a 40 percent stake in the company.

IDG News Service

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