On Monday, Verizon announced the acquisition of Yahoo, one of the largest internet companies in the world that dominated part of the tech market in the pre-Google era. The acquisition was priced at $4.8 billion and includes not only the web division of the company, but also the property on which the company is located.
According to Bloomberg and Reuters – citing market analysts and sources involved in the business – Verizon is aiming to compete with Google and Facebook in the online advertising market. For this, it hopes to integrate Yahoo and AOL, another company that has been a giant in the internet industry and which was also purchased by Verizon.
With the purchase of Yahoo, Verizon will have the third largest online advertising platform in the world, being (well) behind the Big G and the social network from Mark Zuckerberg. Additionally, Yahoo will also enhance the US content – especially videos – focusing on smartphones and other mobile devices.
To complete, Yahoo services (messenger, email, etc.), which are used by more than a billion people, make it a potential market to be explored in the area of targeted ads.
And to think that Yahoo might have owned a certain company that starts with G ...
If you were a teenager or adult in the late 90's, you should remember: Yahoo was the dominant company's internet world, a kind of Google at the time. The company had a funky aura, the best search engine, its email and messenger were extremely popular, it had a great news portal and survived the burst of the digital bubble in the early 2000s.
The company started to go downhill in 2002, when it tried to buy Google. That year, its founders, Larry Page and Sergei Brin, wanted to sell the company and its promising search engine – which even was used by Yahoo itself – for $5 billion. Terry Semel, the company's CEO at the time, offered "only" $ 3 billion.
The deal was done and, from there, we all know what happened. Today, Google is worth over half a trillion dollars, more than 10x the value of Yahoo (if we consider the participation of the latter in Yahoo Japan and Chinese giant Alibaba trade, which were not sold to Verizon).
The market does not forgive those who stagnate. And the downfall of Yahoo proves that name alone does not win in the tech game.
The fact is, the decline of Yahoo can only be credited to the company itself. It did not know how to create a more efficient algorithm than Google to improve search engine results. It tried to create innovative ad formats in the online advertising sector only when it rivals were already far ahead of it. And it did not keep pace with the growth of social networks and was swallowed up by Facebook.
Also, it spent money hand over fist to buy several technology companies with potential, such as Tumblr and Flickr, without quite knowing what to do with them. To top it off, it tried to invest in content and also got that wrong: the company posted a loss of $42 million in this division.
The last attempt by Yahoo to try to retake the top of the Internet giants (or at least get close to them) was the hiring of Marissa Mayer, who was Google's product vice president and is a computer scientist. So few people would be more qualified to take the company back to the top, right?
Wrong. Even promoting cuts in staff, closing the brand products considered unprofitable and continuing to buy promising Internet companies, Mayer failed to reverse Yahoo's fate. She even suffered accusations of wasting money unnecessarily on Yahoo parties. One Christmas event, for example, she was going to spend $7 million.
And to think that in 2008, Microsoft tried to buy Yahoo for $44.8 billion and its founders refused the offer.
Do you still use any Yahoo products? Let us know in the comments.