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At the turn of the millennium, Yahoo!
was the most visited site on the web and was valued at $125 billion.
In Web 1.0 terms, Yahoo!
was like Google and Facebook combined.
In 2017, Yahoo’s services were sold to Verizon for less than $5 billion.
How could such a big company deteriorate like that?
’s management have done to avoid such a fate?
Could something similar happen to one of today’s tech giants?
To answer these questions, we’ll need to go three decades back in time.
Google for $1M?
founders Jerry Yang (left) and David Filo with Secretary of State Madeleine Albright.
Two months later, this catchy name was shortened to Yahoo (the !
was added a year later).
The following year, the site added an internal search engine.
At the same time, to maximize the time people spent on the site, Yahoo!
In 1997, the company acquired the popular RocketMail client, renaming it Yahoo!
Mail, and added public chat rooms.
In 1998, Google’s Larry Page and Sergey Brin offered to sell their PageRank system to Yahoo!
for $1 million, but were turned down.
Since AltaVista and others had rejected similar offers, Yahoo!
also didn’t feel compelled to buy Google just so its competitors wouldn’t.
In early 1999, Yahoo!
could use its overblown share price to make its two most expensive acquisitions.
In GeoCities, sites were organized into “neighborhoods” the equivalent of Facebook groups.
Instead, within two years the neighborhoods were gradually eliminated, turning GeoCities into a generic hosting service.
For $5.7 billion in stock, Yahoo!
Cuban quickly sold most of his stock and became a billionaire.
The site was renamed Yahoo!
Broadcast, and shut down by 2003 as the market for video streaming was still small.
By the year 2000, Yahoo!
The deal not only strengthened Google financially, but turned it into a household name.
In 2001, Timothy Koogle left his job as Yahoo!
’s CEO, and was replaced by Terry Semel.
still saw itself as a content provider, or what’s known today as a Web 1.0 company.
They said they wanted $1 billion.
The three met again, and Semel said he agreed to the price.
Page and Brin changed their demand to $3 billion, which was too much for Yahoo!
in the days after the dot-com bubble burst.
“Soon to be much bigger” indeed.
In 2002, to fight the monster it helped creating, Yahoo!
bought Inktomi, which had provided Yahoo!
search results between 1998 and 2000.
The following year, Yahoo!
had all of the ingredients to fight Google, but combining them took Yahoo!
several years, and Google became synonymous with search advertising.
The new features may have helped Yahoo!
The company also launched the Yahoo!
360 social online grid.
The company’s most influential purchase in 2005 wasn’t a product at all: Yahoo!
invested $1 billion in then-private Chinese e-commerce group Alibaba for 40% of the company.
In 2006, Yahoo!
A company that Yahoo!
could have bought for a similar price was YouTube, but Google beat Yahoo!
to it for $1.65 billion.
By 2007, Yahoo!
’s most innovative service was arguablyYahoo!
Messenger, which received a web version with an online conversation archive and peaked at 94 million users.
That year, Semel left his position and was replaced by company co-founder Jerry Yang.
announced plans to cut 1,000 jobs, or 7% of its workforce.
Then, Microsoft offered to buy Yahoo!
for $44.6 billion in cash and stock combined, or 62% more than Yahoo!
Investors were confident that the deal would materialize, as Yahoo!
’s stock immediately rose to almost as much as Microsoft was willing to pay for it.
Conversely, the Microsoft stock dropped about 10% after the offer, which Yahoo!
actually listed as a reason in the letter rejecting the bid, which Yahoo!
said “substantially undervalues” the company.
share upon the original $31.
demanded $37 per share, and Microsoft withdrew from negotiations.
Aided by the global recession, Yahoo!
finished the year valued at less than $12 per share, and firing 1,500 more workers.
The new CEO repaired Yahoo!
’s relationship with Microsoft, singing a deal to use the new Bing search engine on Yahoo!
in exchange for ad sales management.
Carol Bartz with Microsoft CEO Steve Ballmer.
The layoffs and CEO replacements may have been the reason that Yahoo!
only launched iPhone apps for its most compelling services in 2009.
With phones becoming a dominant platform, Flickr usage stagnated.
Messenger app was much better received, in part thanks to its competitors taking even longer to launch.
Once again, technical issues hurt the popularity of a Yahoo!
product, this time the SPIM (spam + instant messaging) that the popular app suffered from.
OnceWhatsAppbecame a messenger, Y!M fell out of favor.
Bartz was fired in late 2011 amid continued falling revenue.
Months after his appointment, it was discovered that he lied about having a degree in computer science.
He left the company days later.
What the Past Should Have Been
Marissa Mayer.
Upon Thompson leaving, Yahoo!
The new CEO, Marissa Mayer, chose to return $3 billion of the cash to shareholders.
One of the first things Yahoo!
did in the Mayer era was launch a new Flickr app.
It offered the best features of the Flickr website, and utilized the touchscreen controls for horizontal scrolling.
’s desktop site was also redesigned in 2013, with a new color scheme and infinite scrolling for news.
In July of that year, Yahoo!
Mayer is remembered for missing Yahoo!
’s final chance to become a market leader: 14 years after the Broadcast.com fiasco, Yahoo!
Today, Netflix is worth about $170 billion.
By 2016, Yahoo!
wrote down more than $700 million of Tumblr’s value as advertising goals weren’t met.
Another controversy in the Mayer era was her HR management: first, she completely banned working from home.
headquarters in Sunnyvale, California.
In 2014, Yahoo!
sold another portion of its Alibaba stake for $9.4 billion, or $6.3 billion after tax.
At that point it started to become apparent that Yahoo!
In 2016, Yahoo!
Verizon agreed to buy the company’s web business for $4.83 billion.
Not long after, it was revealed that Yahoo!
The following year, Verizon agreed to buy Yahoo!
’s web services for $4.48 billion and share the liabilities resulting from the breaches.
Later, it was discovered that all 3 billion Yahoo!
accounts created over the years had been affected by the data breach.
Japan and Snap Inc.
This is the story of Yahoo!
news website and Yahoo!
Mail still exist, but the company that named them is gone.
A New Yahoo!?
Apollo renamed the company Yahoo!
In recent years, Facebook owner Meta has been criticized for its failure to innovate.
While being a much bigger company than Yahoo!
have begun to emerge.
One can only guess whether the coming decade will make Meta the new Yahoo!
We cover the most prominent areas of their history, innovations, successes and controversies.
