Yesterday, The Wall Street Journal reported that Yahoo is considering selling off its core internet business, which includes Flickr, Tumblr, and of course, Yahoo.com. It’s not surprising that the board is looking for an escape hatch: Yahoo is hurting, and the footfalls of this stumbling tech titan have been echoing for a while now.
The slow undoing of Yahoo is particularly painful to relive because the company was so, so, so close to basically owning our entire online life. In some bizarro universe, Yahoo is the search engine, photo storage, and social network you use everyday. But in this very real world, it isn’t much of anything, basically just Yahoo News and Yahoo Mail and I think Katie Couric still works there. That’s because of two central reasons: A lack of vision and a knack for delivering a touch of death on its acquisitions.
Here’s a look at Yahoo’s biggest mistakes, a road of despair that’s led Yahoo to the dire circumstance it’s in today.
Not buying Google twice and underestimating search
In 1997, Yahoo turned down the option of buying Google for only $US1 million. The reason? According to The Google Story by David A. Vise, Yahoo didn’t want to direct traffic from its own websites:
In part, Yahoo rejected it because the firm wanted computer users to spend more time on Yahoo. The Google search engine was designed to give people fast answers to their questions by swiftly sending them to the most relevant Web site. The Yahoo directories were designed both to answer questions and to keep people on the Yahoo site, where they could shop, view ads, check their email, play games, and spend more money and time, rather than less.
Fast forward five years later, Yahoo had yet another chance to buy Google. This time, Yahoo was already using Google tech to help power its own search engine. Then CEO Terry Semel tried to buy Google for $US3 billion, even though advisers said the company was worth at least $US5 billion. According to a 2007 Wired piece, Semel responded “Five billion dollars, 7 billion, 10 billion. I don’t know what they’re really worth — and you don’t either…there’s no fucking way we’re going to do this!” Semel would later regret the decision.
In fact, Yahoo made a series of acquisitions to help wean itself off Google, which it finally did in 2004. In the end Google flourished, Yahoo floundered.
Letting Facebook get away
Facebook itself is a story of resiliency, dodging 11 separate buyout offers (that we know of), including overtures from Google, Viacom, and yes, Yahoo. In 2006, Yahoo had Facebook investors eager to sell, but a depreciation in stocks knocked what would have been a $US1 billion offer to $US875 million, causing Mark Zuckerberg to walk away from the deal.
Rejecting Microsoft in 2008
Back in 2008, Microsoft CEO Steve Ballmer tried hard to buy Yahoo, which was now in a solid second place in the search engine race. In February of that year, Yahoo’s board decided that Microsoft’s $US44 billion offer was “too low.” According to the New York Times, Yahoo “disputes the notion that its business is deteriorating”. Except Yahoo did make a deal with Microsoft the following year to replace its homegrown search with Microsoft’s Bing.
Failing to sustain Flickr
If you were sharing photos on the internet in the late aughts, you most likely were on Flickr. Before Facebook came around, it was the online application for photo sharing. So what happened? Yahoo basically killed it with corporate bullshit and not seeing Flickr as its own social network, as Mat Honan’s report for Gizmodo illustrates:
“That is the reason we bought Flickr — not the community. We didn’t give a shit about that. The theory behind buying Flickr was not to increase social connections, it was to monetise the image index. It was totally not about social communities or social networking. It was certainly nothing to do with the users.”
And that was the problem. At the time, the Web was rapidly becoming more social, and Flickr was at the forefront of that movement. It was all about groups and comments and identifying people as contacts, friends or family. To Yahoo, it was just a database.
Not considering itself a tech company
Yahoo’s constantly been confused as to whether its a media company or a tech company. Computer scientist Paul Graham offers some insight into what made Yahoo so weird a tech company compared to Google or Microsoft. Essentially, the company made money through ads rather than software, so by that thinking it was a media company, but it often operated like a tech company. Graham also asserts that in the early years, Yahoo was scared of being crushed by Microsoft if it went the tech company direction much the way Netscape did, and it failed to capture a Google-like startup culture.
Tumblr, a future casualty?
Yahoo’s stewardship of Tumblr is following a similar trajectory to its ownership of Flickr. Since Yahoo bungled turning Flickr into a photography-driven social network, current CEO Marissa Mayer straight up bought its own social network with Tumblr in 2013, which had yet to turn a profit. Yahoo immediately started serving ads on the microblogging platform after the deal closed. In April of this year, a shakeup meant bringing Tumblr into the Yahoo fold and further Tumblr redesign issues have only angered users. If the trajectory continues, that means sites like GeoCities, Flickr, and Tumblr (among many others) will have fallen victim to Yahoo’s acquisition curse. In a way, who knows what would have happened if giants like Facebook or Google fell into Yahoo’s hands.
A revamp misfire
The idea of a complete company revamp under the direction of ex-Googler Marissa Mayer has yet to bring about many substantive changes, except the above mentioned Tumblr acquisition. That, in part, is why selling off the core business is looking mighty attractive right now — because there seems to be no solid plan in place. It’s not crazy to think one person can help change the tide in a huge way (just look at Microsoft’s turnaround under Satya Nadella) but Mayer’s tenure has been much rockier and its future is now in question.
If Yahoo chooses to sell off its internet business piece by piece, it very well might be the biggest technology death since the birth of the internet. If it chooses to continue hanging on, barring a minor miracle, we’ll continue to see this slow decline play out a little bit longer.
Illustration by Adam Clark Estes