My Guardian column this week on the Microhoo search lashup:
In bringing together their search traffic, Microsoft and Yahoo are fighting an unwinnable war. Worse, they are still fighting the last war. . . .
But while they pound their little fists on Google’s shins, Google remains the unchallenged giant in the arena that really matters: advertising revenue. According to the blog Search Engine Land, Google takes almost a third of all online advertising money – $21bn a year – and it doesn’t rely just on search.
And Google is turning to the next battlefields: mobile, social media, the live web, and online tools. . . .
Yahoo can now jettison the technology resources that went into search. That’s rather sad. After all, 15 years ago, it was Yahoo that first organised the web for us. Its original ambition seems quaintly naive today: human editors cataloguing every site worth visiting and deciding which were the hot ones we should visit. Back then, we, and Yahoo, thought the web was a medium, like TV, that we experienced together. Yahoo never quite broke out of that thinking. It still treats its site as a destination we have to go to with walls around it to keep us in. It just introduced a new homepage to some fanfare. Homepages are so 1999. . . .
So, let Yahoo and Microsoft celebrate their deal. Yahoo doesn’t have as much to celebrate. It turned down acquisition offers and now it gets no cash from Microsoft. And it is surrendering its earliest competence to a competitor. Microsoft has more cause to grin. It got Yahoo’s search traffic for no cash and doesn’t have to manage the rest of the old beast.
And Google? One wonders whether it notices beyond that irritating poking at its shins. It’s too busy trying to conquer what comes next.
Poor Yahoo. It only goes from worse to worse. They might finally get rid of ineffectual Jerry Yang but then they might get Mark Cuban in the boardroom along with Carl Icahn’s slate. Cuban has an absolutely numbnutty plan to kill Google: Paying sites to drop out of the Google index.
Some headscratching happening at the Online Publishers Association meeting here in London over CBS’ purchase of CNET for $1.8 billion.
I wonder: What is CBS now? What does the brand mean? They just gutted the online news operation and word has it they don’t like new (which I have to believe is a prelude to the same happening to CBS News on the air; a company that likes news would like news anywhere). They had a big news brand that has only deflated. And now they buy News.com, a large (but not growing) niche (but large niche) site.
So CBS joins the ranks of Time Warner and Microsoft, to name two, that try to buy the internet strategies they don’t have. Oh, what the hell, add Yahoo to that list, starting with its purchase of Broadcast.com, which I bring up just to note that Mark Cuban, made a billionaire by that purchase (which soon died) is not on Carl Icahn’s slate of rebel directors for Yahoo. Even Yahoo doesn’t have an internet strategy.
If I started a company, I’d take good money, of course, but I sure would hope not to be bought by a company that is using it to buy the strategy it doesn’t have. I can’t think of a case in which that has worked, can you?
While Yahoo (YHOO) might not have wanted to be acquired by Microsoft (MSFT), its alternative to goose its revenues by relying on Google (GOOG) in an outsourced online search-ad deal is one it might regret even more if struck.
Why? Aside from the potential antitrust issues, which are distracting at the very least, it fundamentally puts one of Yahoo’s main businesses–search advertising–directly into the hands of the very company that killed off Yahoo’s chances of ever succeeding in the arena in the first place.
Yahoo has no visible strategy. Microsoft isn’t in much better shape. AOL remains a drag on TWX. Google wins again.
As a Microsoft shareholder, I’d be delighted if they are saved from buying Yahoo. As a Time Warner shareholder, I’d be delighted if they were saved from owning AOL. But I do think a Yahoo-AOL lashup is this is Dumb and Dumber, Incorporated. Who would run the thing? None of their current bosses, I’d hope. What would the strategy be? Nothing like what it is now: get out of portalthink and get into platformthink, please.
: LATER: A reporter asked for my take and predictions on the MyMicroYahOLSpace orgy. I said:
First, I think a Microsoft-Yahoo combination made little sense. It was Microsoft’s attempt to buy audience — as if you can own audience today, as if we can be bought and sold. That is the old-media way of looking at the world: they controlled content, marketed to get people to come to you, showed them ads, then waved good-bye.
The new way — the Google way — is to be distributed, to make your content, brand, and advertising exportable and embeddable (as with Google AdSense or YouTube videos or Google Maps). I believe that both Yahoo and AOL should follow that example, making everything they have exportable, and becoming a platform for individuals and companies to create and mash-up content and even start businesses.
The other opportunity is to become the ad network for this distributed world. Problem is, Google got there first. AOL and Yahoo have invested fortunes in ad platforms. Again, they did this in the old-media manner, trying to aggregate audience and networks under their roofs. Google, meanwhile, not only bought DoubleClick but also opened Ad Manager, which will serve anyone’s ads for free (and give Google the chance to serve its own ads when sites want). That will expand Google farther and faster than any acquisition like Yahoo or AOL could. If Google can also expand via Yahoo and Yahoo can get more revenue from that than from its own advertising — which says a lot about Yahoo’s strategy — then fine; but doing anything you can to avoid Microsoft is not itself a strategy; it’s a move of desperation.
Microsoft is trying to buy the online strategy is still has not managed to build on its own.
Yahoo and AOL are trying to regain an online strategy they lost. Will they be better together than they were apart? It depends on who manages them and who comes up with a strategy. Clearly, the incumbents at both companies have failed. This takes new leadership who understands the new architecture of the media world and I’m not sure where they’ll find that person. Trying to lash together these two failing strategies and cultures and come out with something new is a thankless task.
News Corp., meanwhile, is being very clever in trying to offload some of the risk of MySpace. People ridiculed the purchase when it was made. It turned out to be smart, as so often happens with the moves Murdoch takes that others ridicule. MySpace is worth more but its strategy is also somewhat unclear as Facebook — and even new platforms like Twitter — build deeper relationships with their members. So if Murdoch can get value out of MySpace now, at a high, and lessen his risk, then he’d be happy.
At the end, I think Microsoft could still win because it is the only one willing to pay much of a premium. Time Warner is a bit desperate to get rid of AOL but it won’t value it too low after having valued it way too high. News Corp. has already shown it is not willing to pay a premium and will only go along for the ride if someone else does.
With some fanfare, Yahoo today unveiled its new women’s site, Shine, with content contributions from lots of big companies including Conde Nast, Hearst, Rodale, and Time Inc. (though I find little evidence of them on the site; most of my clicks took me to stuff written by Shine staff, which doesn’t look small; others too me to snippets from magazines made to look like blog posts with lots of plugs to try to get you to subscribe). It has that women’s magazine voice: “Four ways to be good to your body this week…. Carla Bruni-Sarkozy: We think you’re awesome…. Perfect, pretty, sturdy canvas bags…. How to get on your boss’s good side….”
Poor Yahoo. They could cure cancer while tap-dancing naked and I wouldn’t be impressed. They have just gone and tried to create another portals. Portals beget portals. There’s nothing new in this. Having worked at Conde Nast, I went through conversations about starting sites like this with all the other portals many times over. What’s the big?
The problem is that this is born from a spreadsheet rather than a vision. In the PaidContent report, Yahoo svp Scott Moore “explained that for the longest time, Yahoo had been developing sites focused on topics (for instance Food, Sports and others). Now, with Shine, it has started developing site based on audiences/demographics, and in this case a big one, and lucrative to advertisers.” I’ve seen and heard that tap dance before. Beware any product that starts with a demographic that’s going to excite advertisers because it has lots of brands. That’s portalthink at its saddest.
I was amused to run across friend Jonathan Harris’ project for Yahoo: a time capsule to open on the company’s 25 anniversary in 2020 — only 4666 days left, or gobbling up into Microsoft, whichever comes first.
At Google’s blog today, David Drummond, the company’s chief legal officer and senior VP for development, comes out with phasers set to kill against the Microsoft bid for Yahoo. A week ago in Europe, I ended up at a small dinner and a few other events with Drummond. He’s a serious guy with a stoney glare. I’ll bet he could stare down Steve Ballmer in a contest.
Implicit in Drummond’s and Google’s argument is that Microsoft is a closed company in the open internet. He contends that Google is the better agent of that openness. It sounds rather like a presidential debate: Who is the agent of change? Says Drummond:
So Microsoft’s hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It’s about preserving the underlying principles of the Internet: openness and innovation.
Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies — and then leverage its dominance into new, adjacent markets.
Could the acquisition of Yahoo! allow Microsoft — despite its legacy of serious legal and regulatory offenses — to extend unfair practices from browsers and operating systems to the Internet?
One should never underestimate the power of Microsoft. Nonetheless, I think the internet’s openness is precisely what has kept Microsoft from monopolizing it, as some feared. I’d say that the precedent of AOL taking over and then slowly killing Netscape is relevant here: I’ll bet that Microsoft is just as likely to destroy as to exploit what it gets from Yahoo. That is often the history of these takeovers, when a company tries to buy the strategy it doesn’t have: AOL and Netscape, Time Warner and AOL, Yahoo and Broadcast.com, and on and on.
And if I were Google, I’d be a bit careful trying to call someone else too big, since some are trying to paint Google as the new overblown boogeyman. In Europe, newspapers are trying to stop Google’s acquisition of Doubleclick for similar reasons (though Reuters says EU approval is likely). Personally, I don’t think regulation is needed in either deal. But Google does:
In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ email, IM, and web-based services? Policymakers around the world need to ask these questions — and consumers deserve satisfying answers.
This hostile bid was announced on Friday, so there is plenty of time for these questions to be thoroughly addressed. We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first — and should come first — as the merits of this proposed acquisition are examined and alternatives explored.
It’s hard to believe that Google is actually scared of Microhoo but is merely using PR and regulation to try to throw some marbles on the ground in front of them. Google does indeed understand the open internet better than either of these young dinos and that is its greatest competitive advantage. In this case, size doesn’t matter. Openness and smarts do.
(Crossposted from Comment is Free, where there are also comments.)
Yahoo, I’ve long argued, is the last old media company, for it operates on the old-media model: It owns or controls content, markets to bring audience in, then bombards us with ads until we leave. Contrast that with Google, which comes to us with its ads and content and tools, all of which I can distribute on my blog. Yahoo, like media before it, is centralized. Google is distributed.
It’s appropriate, then, that Yahoo is being bought by what one could say is the last old technology company, Microsoft. For Microsoft still operates on a model of control: closed in an open era. They will get along well together.
This is not a deal about content. At an entrepreneurial conference in New York this week, OnMedia, a venture capitalist said that the “perceived value of content is approaching zero.” That’s a kick in the kidneys to us content people.
No, this is a deal about audience and advertising. After the big guys consolidated all the ad networks they could — aQuantive to Microsoft, Tacoda to AOL, Doubleclick to Google (the EU willing) — next they’re buying up audience in bulk. That’s what Yahoo is, really. They call it a firehose: people in bulk, us as masses.
The reason this is happening is that advertisers and their agencies are still stupidly treating and buying us as masses — they want everything to operate like the one medium they understand: TV. (This is why, in the U.S., even as television’s audience shrinks, the rates paid for advertising continue to increase — because, oddly, the decrease in audience is creating a market scarcity in commercials’ reach).
This is just as well for Yahoo, which had no strategy, really. They’d gone as far as they could with the old-media model, as exploited by the last CEO, former movie-studio head Terry Semel. Yahoo cofounder Jerry Yang started saying the right things about turning Yahoo into a platform, but it probably would have taken years to turn his culture around. They were too used to operating like a movie studio or publishing house.
Will this be big enough to beat Google? No, because big won’t win in the end. Open will.
I have complained about Yahoo mail many times. About three years ago, I made the mistake of taking a Yahoo premium account — just to keep Yahoo from killing my account, which is its way of strongarming customers into paying. I canceled the account at least two years ago but just found it on my credit card bill. I spent 20 minutes on the phone with the Philippines trying to cancel the account and get a refund. They refuse to refund. The best part is that I asked for the guy’s name — Joe — and said I was going to blog about this, which I think is only fair. He told me to stop “recording” the call or he would terminate it. They can record. We can’t. Shades of AOL. Their attitude is every bit as bad as Comcast or AOL. Compare and contrast with Google. Yahoo is the last old-style company. It treats its customers like prisoners. They think they can make money telling us what we cannot do. Google has killed them for good reason. I never go to Yahoo. In a word: Yahoo sucks.
Last night, I got to crash a snazzy dinner thrown by Yahoo to talk about social media with London geekmedia. I came away wondering whether we will start to see a new Yahoo.
Two of their executives engaged in what I argued was continuing portalspeak. “Yahoo’s where the activities are,” said one, who talked about “properties.” Another bragged about owning consumers because they do their email there and talked about Yahoo’s continuing “aspiration to be the starting point for consumers and advertisers.” That is the definition of a portal.
But then John Linwood, a vp of engineering, talked about opening up Yahoo as a platform. The other day, Yahoo boss Jerry Yang talked about this, too, but I was concerned that he was still looking at this as a media and portal model, trying still to get people to come to Yahoo rather than following Google’s open and distributed model. But Linwood said that, indeed, they plan to provide tools and content that developers can use to build new businesses away from Yahoo. Then he also talked about putting controls on that.
BBC tech correspondent Rory Celland-Jones asked pointedly whether Yahoo knows it has missed out and it is just slapping the social label on its rhetoric to try to catch up. One of the Yahoo execs tried to insist that the internet is still “at a very early stage” (read: Google has not won yet, he wishes).
I think what we witnessed last night was the debate the company is having within: portal or platform? Even if platform has won at the top, we need to hear stronger confirmation of that and see strong action and the question remains whether it’s possible to change Yahoo’s culture to make the shift. It’s already big and old. But it’s not too late to change and I think I finally saw the seeds of that change.
We’re finally starting to hear sensible strategic talk out of Yahoo. The Times Bits Blog reported this week that Jerry Yang is talking platform:
Mr. Yang didn’t reveal too much in terms of specific details. But the biggest new thing about Yahoo’s strategy is its plan to open up to others, and Mr. Yang spoke in general terms about his hopes for turning Yahoo into a “platform†where developers, content creators and advertisers could offer services to Yahoo’s audience.
“The ‘platform’ word has been the most overplayed and used,†in the tech industry recently, Mr. Yang said, no doubt referring to the success of Facebook in opening up its social network to third party developers. But clearly, Yahoo wouldn’t mind having similar success.
So what does platform mean to Mr. Yang?
“A business that has a set of standards that allows a set of companies to participate and find benefit from it,†he said. Mr. Yang said achieving platform status for any company is no easy task. But he said it is worth trying, because by empowering other businesses, Yahoo itself would become a more powerful business. Yahoo, he said, has been a great collection of Web sites. “I think we need to think beyond that,†he said.
OK, here’s what I’d do with Yahoo: I’d pull a reverse Facebook, a Zuckerberg with a twist. Facebook opened itself up as a platform for people to come in and do things there. I’d open up Yahoo as a platform for people to export instead. I would turn absolutely every — every — piece of Yahoo into a widget any of us could export and use on our own sites. I’d take all the functionality there and enable people to enrich their own sites, to build on top of it. . . .
There’s still a critical difference there. The Times says Yang wants to open up Yahoo to developers to serve its audience. That’s a platform in the Facebook model. That’s still mediathink: gathering an audience to an address and giving them stuff there. I’m talking about a platform in the Google model: let people use you to build what they want where they want. So I think Yahoo’s thinking is halfway there. But that’s better than nowhere.
