In a bid to compete with eBay (EBAY) in mainland China, rumors are swirling that Yahoo (YHOO) is planning to spend about US$1 billion for a 35% stake in Alibaba.com, one of China's leading e-commerce platforms.

The Alibaba company is headed by Jack Ma and along with its B-to-B site at Alibaba.com also operates Taobao.com, an online auction site similar to eBay's Eachnet.com auction site in China.

eBay has also in the past voiced its intentions to deal with Alibaba, but local media report that a deal with Yahoo might be better for Alibaba because there is less overlap in services. Alibaba can also gain access to Yahoo's search platform.