The past, present and possible future of Yahoo
- Many have laid the blame of the company’s present woes on the shoulders of outgoing CEO, Marissa Mayer. Once a promising star of the tech-gliteratti, Mayer was brought in to turn the ship around, as managerial ossification, under previous CEOs had stalled growth and innovation.
- After this acquisition, all of Yahoo’s assets, with the exception of Yahoo Japan and the company’s stake in Chinese e-commerce giant, Alibaba, will become part of Verizon.
Before I start, let me say straight off the bat, that I am a Yahoo fan. I loved how the site was laid out (in a news aggregator layout as opposed to Google’s bare basic bones setup) and how, thanks to modern search engine algorithms, it would provide me with news and articles that reflected my daytime preferences.
However, even to fans as committed as myself, the writing has been on the wall for quite some time. Yahoo was an internet titan in terminal decline, the once mighty company known for innovation had now fallen into near irrelevance as competitors like Google and others reduced it to a market in the lower single digits in the Global Search Engine traffic share.
Launched in 1994 by two Stanford Engineering students, David Filo and Jerry Yang, as “David and Jerry’s Guide to the World Wide Web”, the site was a groundbreaker in the sense that it served as a directory of other websites organised in a user friendly hierarchy, as opposed to an indexed listing used by other rival search engines. The brand was quickly renamed Yahoo! (an acronym for Yet Another Hierarchical Officious Oracle”).
In 1995, the Yahoo URL was launched on the internet and the brand seemed unstoppable. The company grew monumentally and made a name for itself in areas like search engine directory, email services, news and information provision, financial information, e-commerce and digital advertising.
However, a series of destructive missteps over the years, including bad leadership, frequent changes at the top, lack of mission-critical talent retention, bad acquisitions and lack of product innovation have brought things to this point. So it was good news indeed when Verizon Communications, the largest telco by market share in the US bought out most of Yahoo’s assets, including their core internet business for a bargain price of $4.48 billion (considering Microsoft had offered to buy Yahoo for nearly 10 times that amount at $44.6 billion in 2008) on June 13, 2017.
Many have laid the blame of the company’s present woes on the shoulders of outgoing CEO, Marissa Mayer. Once a promising star of the tech-gliteratti, Mayer was brought in to turn the ship around, as managerial ossification, under previous CEOs had stalled growth and innovation. Mayer had all the right credentials, an engineering graduate and programming mentor from Stanford; she had carved a successful niche for herself in a field dominated largely by men. She had a successful stint as Head of Search and User Experience as well as Maps and Location Services at Google, both of which were drivers of growth and revenue at Yahoo’s most aggressive competitor.
Many have laid the blame of the company’s present woes on the shoulders of outgoing CEO, Marissa Mayer. Once a promising star of the tech-gliteratti, Mayer was brought in to turn the ship around, as managerial ossification, under previous CEOs had stalled growth and innovation.
Under her leadership, Yahoo was supposed to make a comeback that would form the basis of business case studies for the next generation of tech-leaders. However, that was 2012, and since then Mayer was accused of the same kind of leadership gaffes that were the undoing of her predecessors. She was accused of an anti-male bias, of downsizing key staff without proper consultation, for top down managerial direction with little or no input from the field and most critically of being aloof from her team and ill-informed about the needs of the people who could turn Yahoo around.
Adding to the already significant woes of the company, came the news of two major data breaches of sensitive consumer information in September and December 2016. This not only damaged the brand’s equity in the eyes of key user segments, it also caused a downward revision of the original selling price offered by Verizon to Yahoo by $350 million.
Although many analysts wrote off Yahoo as yet another massive bust of a former internet giant, others pointed out that despite its much publicised troubles and lack of turnaround, the company still showed immense potential. Even in 2016 as Yahoo’s troubles continued to mount, the company showed great promise. Yahoo, according to web traffic estimators, Alexa and SimilarWeb, continued to attract traffic of around 700 million people a month. The website is the sixth most popular website on the internet. Yahoo in their most recent stock evaluation claimed global traffic numbers of over half a billion unique users in over 30 languages with well over seven billion page views every month. It is precisely these traffic numbers and a number of promising acquisitions under the Yahoo marquee, such as Tumblr and the internet advertising service Brightroll that attracted the interest of a major buyer like Verizon.
After this acquisition, all of Yahoo’s assets, with the exception of Yahoo Japan and the company’s stake in Chinese e-commerce giant, Alibaba, will become part of Verizon. The remainder of Yahoo’s business will be reorganised into a new entity Altaba, where as assets in Verizon’s acquisition will merge with AOL (also another buyout by Verizon) and become a new company called Oath.
After this acquisition, all of Yahoo’s assets, with the exception of Yahoo Japan and the company’s stake in Chinese e-commerce giant, Alibaba, will become part of Verizon.
The acquisition marks the transition of Yahoo from a leading umbrella brand to a sub-brand in Verizon’s stable. While both AOL and Yahoo are expected to retain their current branding, future growth of the business will revolve around the Oath brand.
Although the rise and fall of Yahoo is something that tech analysts will continue to discuss for years, what seems to be driving the discussion right now is why did Verizon buy into a fading internet star. Many feel that the acquisition is more about Verizon’s strengths than Yahoo’s weaknesses. Verizon over the years has been working towards creating a platform to break into the content creation, distribution and digital ad revenue business in a big way. The company acquired yet another faded internet giant America Online (AOL) in 2015 and is now combining the strengths of both Yahoo and AOL into Oath. Under Oath, Verizon hopes to build scale in all the areas highlighted above and will use the propreitory technology of both companies to build key advantages in areas like programmatic ad buying, targeting tools, geo-location and analytics reporting. Also putting together these companies will enhance the availability of their services and key advantages to new media like video and platforms like mobile.
If the new venture takes off, Oath will provide Verizon with the ability to create and distribute their own content that can be leveraged across mobile, desktop and broadcast media. The company is committed to expanding on its content distribution strategy and is building up its video streaming go90 service. With the launch of Oath, the company will have a number of mainstream content brands, such as AOL, Yahoo, MapQuest, HuffPost, TechCrunch and EndGadget all under one umbrella. Verizon claims that the name for the new media company “Oath” signifies their long term commitment to the new business. The company will have offices in over two dozen countries and a full functional production studio to create content with some of the biggest names in show business.
So, although it is a fact of life that Yahoo won’t be what it used to be, the future of their strongest elements remains promising under Oath.
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