There was a time when Yahoo was practically unavoidable, but then it became about the web portal. TECHBOOK takes a closer look at the development of Yahoo.
Sometimes the flap of a butterfly’s wings is enough to change stories in a completely different direction. The once largest web portal Yahoo symbolizes this effect best. In the early days of the Internet boom, Yahoo had a huge house number. As a result, the web pioneer misses a lot of great opportunities. In addition, Yahoo has failed to define a true brand essence. While Google has plans at some point to become the largest search engine or Facebook fills the term social media with life, Yahoo remains a colorful department store without a real core product. As such, Yahoo’s story is also a tale of creeping decline.
When the Internet conquered our home in the 1990s, most people were still sitting in front of their monitors largely aimlessly. That’s why digital helpers in particular, which provide orientation, celebrate great success in the beginning.
One of them is AOL. At the same time, Yahoo entered the Internet stage in 1994. However, the original name is “Jerry and David’s Guide to the World Wide Web”. The name refers to its creators Jerry Yang and David Filo.
Yahoo squeezes the internet into a web catalogue
First of all, the name says it all. Yahoo sees itself as Web catalog or web portal, which aims to help people in their search for the best websites. Similar to AOL, Yahoo does not map the entire Internet. Instead, visitors are presented with a small, editorial selection of websites. Like a catalog, Yahoo lets you browse by category, such as news, sports, politics, or entertainment. Countless websites are waiting to be discovered in each category.
To ensure that the offer appears as attractive as possible, Yahoo employs a huge editorial team. Real people scour the World Wide Web for the coolest places on the Internet and present them vividly in the Yahoo web catalog – free of charge for users. The web portal lives initially only from advertisers.
Yahoo Groups and Mail as further pillars
In addition to this web catalogue, two other services ensure the rapid rise of the company. One is called Yahoo Groups; behind it hides a forum system. Internet forums were simple precursors of social media back then. People meet there and exchange ideas about their common hobby, their favorite series on TV or cooking recipes.
When the Yahoo Groups were closed at the end of 2020, this caused a powerful outcry within the online community. This illustrates the importance of this huge forum system even today, despite Facebook, Twitter or other social media.
The third important pillar of Yahoo is called Yahoo Mail. At the time, the company offered a free email address. The Yahoo mail addresses still work today. However, if you now come out with a Yahoo address, you may get irritated looks.
Great success, but also great mistakes
At the end of the 1990s everything is very different from today; Yahoo is one of the giants on the internet. In 2000, the company breaks the billion dollar sales mark for the first time. As a result, Yahoo will no longer leave this area, but will even continue to grow.
But even at this point in time, it became apparent that although Yahoo gives people orientation on the Internet, it is increasingly losing its bearings when it comes to a viable business model. Especially at the beginning of the 2000s, countless start-up companies were springing up all over the world. Among them are companies that were still unknown at the time, such as Google or Facebook.
Suddenly, the importance of search engines on the web is growing. Yahoo is still sticking to its web catalogue. The company has since teamed up with the former search engine giant Altavista. In addition, Yahoo already works loosely with Microsoft when it comes to Internet searches.
Yahoo competes with Google and Facebook
The decision-makers at Yahoo also perceive Google. However, they misjudged the potential. In 2002, Yahoo even tried to buy Google. However, the company is half-hearted in its negotiations. This is how a takeover fails. When Google went public in 2004, Yahoo sold its stake in the search engine company at $80 per share. Later, the value of the share will be many times higher – the early sale of shares, also a strategic mistake.
The story, however, continues even more unbelievably. In 2006, Yahoo is in promising negotiations with a certain Mark Zuckerberg. He has just founded a social network with Facebook. Yahoo wants to incorporate Facebook into its own corporate empire.
At first it doesn’t look bad at all. But Mark Zuckerberg is said to have had doubts at the time as to whether Yahoo even understood the direction in which Facebook should go. That’s why he’s withdrawing from the negotiations and going his own way. In retrospect, certainly not a wrong decision. For Yahoo, however, this is the second business blunder in a row. The consequences for the company are soon reflected in the sales figures. Starting in 2009, these will go downhill.
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Yahoo begins its descent
The management tries everything to reverse the development. Beginning in the early 2010s, Yahoo works more closely with Microsoft. The Yahoo search links the company to the Microsoft search engine Bing. In addition, Yahoo takes over the blogging platform Tumblr in 2013. The photo platform Flickr has long belonged to the Yahoo web portal.
However, the successes remain. Former Google Vice President Marissa Mayer has been in charge at Yahoo since 2012. Ironically, a former Google employee ultimately ensures the final demise of the former web pioneer. To be fair, however, it must be noted that other people in responsible positions have already made the wrong decisions beforehand.
Marissa Mayer tries to give Yahoo a new image. The new boss is trying to establish the company in the digital magazine segment on smartphones and tablets. To this end, she develops her own formats for the areas of food and technology.
In order to gain a foothold in the growing streaming market, Marissa Mayer founded her own video platform Yahoo Screen. The company even has its own formats produced for this purpose. But there are now much better offers for both digital magazines and streaming. Yahoo is lagging behind.
Sale seals the end
In 2016, the expected happened: Yahoo migrated to the telecommunications company Verizon for a price of 4.5 billion US dollars. For a similar price, Verizon has already snapped up another former Internet giant, AOL. The new owner wants to merge AOL and Yahoo in order to then compete with Google and Facebook in the field of online advertising.
This endeavor also fails. In 2021, Verizon will sell the AOL and Yahoo brands to the private equity firm Apollo Global Management for a total of almost five billion US dollars. The decline of Yahoo is thus complete.
Yahoo once had a market value of more than 125 billion US dollars. The failed negotiations with Google and Facebook have largely determined the future of the former web pioneer. Two decisions, comparable to the flapping of a butterfly’s wings, but in hindsight with massive implications for Yahoo’s corporate future.
Today, the German Yahoo presents itself as a news portal with little relevance. No web portal, no forums, only Yahoo Mail survived. Anyone who still has a Yahoo e-mail address has experienced a large part of the history of the Internet and thus also of Yahoo.