“We agree that the Aliyun OS is not part of the Android ecosystem and you’re under no requirement to be compatible” Andy Rubin, senior VP of Android at Google took to Google+ to point out. “However, the fact is, Aliyun uses the Android runtime, framework and tools. And your app store contains Android apps (including pirated Google apps). So there’s really no disputing that Aliyun is based on the Android platform and takes advantage of all the hard work that’s gone into that platform by the OHA.”

In a post on the official Android blog, meanwhile, Rubin phrases the OHA ecosystem as a “virtuous cycle” where events are reinforced “through a feedback loop” in which “each iteration of the cycle positively reinforces the previous one.” The contrast, the exec points out, is that Aliyun does not move to reinforce Android in any way.

“So if you want to benefit from the Android ecosystem, then make the choice to be compatible. Its easy, free, and we’ll even help you out” Rubin concluded. “But if you don’t want to be compatible, then don’t expect help from OHA members that are all working to support and build a unified Android ecosystem.”

Rubin’s comments were prompted by arguments by Alibaba exec Jon Spelich, who told CNET that Google was “just speculating” about the company’s platform, and that “Aliyun is different”:

“Aliyun is an open-source based OS that is also an open ecosystem that allows others to host their mobile-enabled Web sites in our cloud and we make those Web sites available to users who use Aliyun OS phones. So we are an ecosystem that includes other Internet companies, whereas Android does not because it provides apps through downloads. It’s the crux of the whole cloud vs. app debate. Cloud is open, apps system is closed because it is controlled by the operator of the apps marketplace. So you see: Two competing ecosystems, one that’s open through the cloud, the other is closed and restricts users to only the apps that they want you to see” Alibaba

That argument of broader flexibility for developers, service providers, and end users doesn’t wash with Google, however. “Noncompatible versions of Android, like Aliyun, weaken the ecosystem” the company said in a statement.

[Thanks to everyone who sent this in!]

Acer has declined to comment publicly on the issue, but Alibaba proved not to be so reticent. “Our partner received notification from Google” it said in a statement, “that if the new product launch with Aliyun went ahead, Google would terminate Android product cooperation and related technical authorization with Acer.”

That would be a particularly draconian approach, and it’s not something we’ve heard of Google threatening before. It seems the frustration came not from a forking of Android but Alibaba’s intention to use another OS, Aliyun, of its own creation, TNW reports; that runs webapps, based on Alibaba’s servers, though can also install Android apps.

Without a comment from Google, then, or Acer, it’s hard to say what’s happened. Alibaba has not given any indication of what it plans to do next, now that Acer is apparently out of the picture. In a statement, published on the official company news site, it described Google’s decision as “clearly unfair to consumers.”

“We believe that by introducing the Aliyun OS we are giving consumers and hardware makers more options which is the foundation of a healthy and strong market” Alibaba said. “We think that it should be left to the market to decide.”

That “transitional license” allows Alibaba to continue to use the Yahoo! branding, but also allows Yahoo! to make other investments in the Chinese market. In return, Alibaba will pay $550m and ongoing royalty payments, as well as license certain undisclosed patents to Yahoo!

“ Yahoo! intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction” the company said in a statement on the deal. “While the form of the return of capital to shareholders has not yet been finalized, Yahoo!’s board has increased Yahoo!’s share buyback authorization by US $5 billion concurrently with this transaction.”

Interestingly, Alibaba apparently does not yet have the necessary funding to complete the initial buy-out, which amounts to roughly 20-percent of the firm overall. If it cannot achieve the full financing – amounting to at least $6.3bn in cash, with the remainder in up to $800m of newly-issued preferred stock – it will be required to buy “at least” 10-percent according to the terms of the deal, rising to up to one half of Yahoo!’s stake if the financing comes through. Alibaba has said it expects to use a combination of cash, debt, equity and equity-linked financing to fund the change in ownership, and the deal is expected to close within six months.

Further down the line, at the time of an Alibaba IPO, Yahoo! will be permitted to either sell a quarter of its shares back to the company or publicly. Following the IPO, Yahoo! will be able to sell off its remaining shares, complete with mandatory marketing support from Alibaba.

The six banks that are said to be participating in the fund-raising include Australia and New Zealand Banking Group Ltd., Credit Suisse Group AG, DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings PLC and Mizuho Financial Group. Right now, the banks are said to be in the process of getting the internal credit approval for underwriting. The payback term is said to be three years, and the loans have a yield of about 4%.

According to the sources, the loan is expected to finalize this month. The Wall Street Journal reports that Yahoo is trying to sell shares in the Alibaba Group and Yahoo Japan in an attempt to raise money while it continues to struggle. Yahoo has recently lost founder Jerry Yang and other board members as it continues its downward spiral. Yahoo’s revenue fell 21% last year and the company seems to be living on borrowed time.

[via WSJ]