The New Yahoo is 'Google Lite'. Can It Succeed?

Thursday Jun 6th 2013 by Mike Elgan
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Yahoo appears to be borrowing from Google's playbook. Will the strategy work for the underdog? 

Yahoo President and CEO Marissa Ann Mayer has been in charge of her company for almost a year now.

Yahoo is a dinosaur, built in another era when Internet directory-based portals reigned and blogging, social networking and smartphones hadn’t been invented yet.

Mayer was hired to achieve an impossible dream: To turn Yahoo around and make it a lucrative, powerful organization again.

But how?

I think in the answer is becoming clear: Mayer is remaking Yahoo in Google’s image. And if that’s the goal with Yahoo, Mayer is the right woman for the job.

Before taking the helm at Yahoo in July of last year, Mayer had worked for only one company: Google.

She started in 1999 at the age of 24 (as employee number 20) and worked there in a variety of engineering and leadership roles during her 13 years.

For most or all of her time at Google, Mayer was part of the strategic inner circle, spending years in constant, high-level brainstorming and decision-making sessions with founders Sergey Brin and Larry Page, as well as former CEO Eric Schmidt.

It’s reasonable to assume that just about everything she knows about running a technology company she learned at, from and through the perspective of Google.

Yahoo’s got a long way to go if it wants to become Google. Its current market capitalization is about one-tenth of Google’s -- roughly $29 billion compared with Google’s $285 billion.

In a best-case, moon-shot scenario, Mayer would bring Yahoo’s value to about half of Google’s, which would be a 500% increase and would make her one of the most successful tech CEOs in history.

The Facebook, Google and Yahoo Business Model

The tech echo chamber tends to get stuck on obsolete product categorization. Clarity is better achieved by ignoring these labels.

For example, when Facebook offers integrated social posts, messaging, instant messaging, Skype video chat and social sharing, it’s a social network.

When Google combines these things, it’s the forced integration of different services.

When Yahoo does it, it’s a “portal.”

These distinctions can lead us astray. Does it matter if users perceive or believe or expect disparate services are or should be in one site or on many?

What matters is a single sign-on for the user that opens doors for multiple integrated services and, more importantly, to be tracked by those companies for personalized services and advertising.

The “signals” gathered on all of a company’s sites can be applied to contextual advertising in each.

For example, location is a signal. By knowing the fact that a user is in Austin, Texas, via a mobile app, ads can be served up on the desktop photo sharing service that promote restaurants in Austin.

What’s the difference between Facebook learning about you via your status update, Google+ learning about you via your post to circles, and Yahoo learning about you via your post on Tumblr to serve up custom-tailored advertising in Messages, Gmail and Yahoo Mail, respectively? It’s the same business model. It’s something like a zero-sum game, too. More time spent on Google+ is less time spent on Facebook and vise versa.

The larger dynamic in social content is that the big guys are rapidly getting bigger, both by building new features and buying new companies.

Their objective in all cases is to give users a lot of good reasons to spend time using their services in order to learn as much about each user as possible, algorithmically speaking, so that advertising can be offered in a customized and therefore effective and lucrative way.

If we can forget about the arbitrarily applied distinctions, each of the mega platforms needs key components of communication, content and commerce.

And these services need to be optimized for harvesting information about who and where the user is, what she does and who she does it with.

And that’s the problem with Yahoo. The company doesn’t have the right “stuff” for keeping users engaged in the right kinds of signal-harvesting activities.

How to Turn Yahoo Into Google

Mayer announced recently the conversion of all Yahoo Mail "Classic" users to a new version that offers new benefits for both users and Yahoo.

For users, the new service is supposed to have better spam filtering, among other things. For Yahoo, the service does what Gmail does: It “reads” your email to serve ads that reflect the content of your conversations. If you’re emailing someone to ask their advice about buying a new digital camera, their reply might have digital camera ads next to it.

Under Mayer’s leadership, Yahoo has unveiled a stunning redesign for its Flickr photo site. More importantly, Mayer has signaled a new direction for the site, moving away from professional photographers toward a more broad-based social photo sharing service, probably one increasingly integrated with other Yahoo services.

The company also made a failed bid for online video site Dailymotion, and is now said to be working on an acquisition of the online video streaming service Hulu. (At the time of this writing, Yahoo was in a bidding war for Hulu against DirecTV, Time Warner Cable and other major companies.)

Since Mayer became CEO, Yahoo has acquired Alike, Astrid, GoPollGo, Jybe, Loki, Milewise, OntheAir, Snip.it, Stamped and Summly. Most of these were acquihires -- acquisitions made for the purpose of hiring the startup staff. Mayer is basically hoarding Silicon Valley tech geniuses.

Could it be any clearer that Yahoo wants to be Google?

The forced conversion to data-harvesting email mirrors Gmail. The high-end photo service for the masses mirrors Google+’s sophisticated photo features. The Tumblr buy mirrors Google+’s social sharing. The Dailymotion and Hulu acquisition attempts mirror YouTube. And the tech talent hoarding mirrors Google’s overall hiring policy.

All of Yahoo’s major moves since Mayer has been in charge have been about making Yahoo more like Google.

Yahoo’s Got Something Google Hasn’t: Unfiltered Content

The main difference between future Yahoo and future Google is that Yahoo doesn’t filter content and Google does.

Making matters worse, Tumblr has an enormous amount of “stolen” content, posted without permission of the copyright holders. It’s unclear whether this fact opens up Yahoo to potential lawsuits.

Yahoo claims that Tumblr is just the Internet. But it’s not clear that a judge would view it that way. Tumblr pictures are uploaded to Yahoo’s servers, and Yahoo sells ads against that content.

Google, on the other hand, does not allow what it considers objectionable material on Google+. But it doesn’t seem to scan for copyrighted material, either (as it does on YouTube, for example).

Much of the adult content involves depictions of violence, degradation and abuse of various kinds. So Yahoo will be facing the ire of human rights campaigners, feminist organizations, animal cruelty opposers, anti-violence groups and others.

It’s not certain how a Tumblr content crackdown would affect Tumblr and Yahoo. Tumblr is considered by many users the biggest social blogging service where control isn’t exerted by a big corporation with an ill-defined and vaguely puritanical mission.

So Mayer’s stated decision to keep mature content in Tumblr brings both risks and opportunities.

It’s very clear now that Mayer’s objective at Yahoo is to transform that old, lost portal company into a “Google Lite” -- using the same aggressively contextual, advertising-focused business model that combines dozens of major content and social experiences into an increasingly integrated experience for users.

There’s just one question: Is the Internet big enough for two Googles?

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