Yahoo's Chance To Defeat Google in the Arena That Really Counts

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Jul 11
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Yahoo's Chance To Defeat Google in the Arena That Really Counts

Yahoo has the misfortune of being a successful company that is constantly compared to an even more successful one, Google. Despite some very canny acquisitions (such as del.icio.us and flickr), it has gone through a number of strategic shifts, the most recent abandoned one being the Semel/Braun attempt to turn the portal into something more like an interactive Hollywood studio. The Internet company still has some tremendous resources. It did, after all, take in more than $6 billion last year and enjoy a profit of $3.75 billion. And many million people use its service every day: More people use Yahoo email than any other such service. That's its core. So what's Jerry Yang, Yahoo's founder and new CEO, to do?

Regardless of whether the board considers Yang an interim seat-warmer or a permanent boss (all public statements suggest it is the latter), he may be what the company needs most now: a visible reminder of its roots, as a small, scrappy, hungry, innovative company. Of course, as it matured, Yahoo was overtaken by the at-the-time smaller, scrappier, hungrier, more innovative company Google.

What set Google apart? It wasn't just that its search engine was more effective, or that its interface was beautifully austere at a time when every other search engine was stuffing its pages with more and more dancing baloney. What also set Google apart was a sense that it was a different kind of company, a company that introduced itself to the world with a promise, a promise to not be evil.

That's not an arena in which Yahoo has been operating. When it's not handing over member information to the Chinese government, it's blocking pro-human-rights moves by its shareholders and defending its actions before a Congressional committee.

But it's not an arena in which Google has been operating either. It has generated open letters from Chinese bloggers (cited previously on Radar by Brady Forrest). And Google's board of directors has advised its shareholders to vote against anti-censorship proposals.

Google is too far ahead of Yahoo in the current search generation for Yahoo to win. But Yahoo might just regain its scrappiness and innovation -- its sense of purpose, even -- by taking on Google where the search giant is faltering: In its not living up to its admonition "Don't be evil." Google started by supplying search results for Yahoo and then besting Yahoo at its own game; Yahoo could return the favor by taking the most high-profile differentiator Google has -- "Don't be evil" -- and claiming it for itself. As Nat Torkington has pointed out recently on the Radar back-channel, "don't be evil" is a great differentiator. Nobody's doing that right now. A company with $6 billion in revenues and hundreds of millions of customers fighting against censorship? It might finally be a fair fight, a fight in which Yahoo would become something it isn't seen as now: a leader. At a time when the Net is in very real danger of becoming much more closed, who would you want to give your business to?

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Comments: 11

Gen Kanai [07.11.07 04:41 AM]

Quite an interesting challenge.

Sadly, I think between the demands of Wall Street and the demands of the non-democratic governments that Y! has to contend with, even the largest Internet company would be burdened to take up your challenge.

If there was historical precedent that showed how companies went against commercial gains in order to uphold ethical standards, and benefited from that stance, I'd be inclined to think it was a possible future.

I'm afraid history has shown that it is better to be cynical (or realistic?) about the actions of commercial businesses in the face of governments or the demands of Wall St.

"At a time when the Net is in very real danger of becoming much more closed..."

Instead of asking corporations to act in ways that they are not incented [sp?] to do so, perhaps it is better to think about how to better promote open standards, open source and non-profit organizations which promote open-ness and fight closed-ness.

HG [07.11.07 05:54 AM]

If any of the search engines promised not to store search records by IP or with a cookie, I would switch to using their search engine now. I want anonymity. I don't trust that Google can continue to keep their records secret from government agencies.

Eideard [07.11.07 08:22 AM]

Yup, yup. Meeting the ideological requirements of American teaparty yappers with no perception of the demands of history and economics should be every nation's sole priority.

Ignore what progress has been made, say - looking at India and China side-by-side from the 1930's to now. Better to listen to white middle-class ideologues who aren't even capable of leading any American political party into defending our own Constitution.

Yes, my characterization isn't fair. No shit. Neither is life.

Leo Dirac [07.11.07 09:13 AM]

While I agree that this would be a good strategy, I'm dubious about Yahoo's ability to execute on it. What you're suggesting is actually a cultural shift. That's an extremely difficult thing to do for a company with >10,000 employees.

Corporate "Evil" is a very subtle and pernicious thing. Having worked on evil projects and seen a company somewhat mature away from this tendency, I know how hard it can be to change. It's a desire to make money, which all companies naturally have to some extent. Evil comes about when this becomes more important than things like the customer. This culture is reinforced with countless explicit and implicit incentive systems within the company such as performance reviews, bonuses and general attitudes. Google inoculated itself against this condition by stating it up front and pounding the message into every new hire. I'm guessing pounding it out of all of Yahoo would require having something bigger to rally behind where this is a part of it.

Making a couple of technology changes like abandoning cookies/logs could appear to be a shift in this direction. But odds are it would just be a PR move rather than a genuine cultural shift. Insiders would be asking themselves "What can we do to appear less evil so we can attract more customers?" which really misses the point.

Kevin Curry [07.11.07 10:38 AM]

I'm not sure I agree with the foundation on which your hypothesis rests:

"...the most high-profile differentiator Google has -- "Don't be evil..."

I am familiar with this motto/corporate philosophy, but question whether the average Googler is nearly as aware. As Chazz Michael Michaels (Will Ferrell, Blades of Glory) so eloquently put it, most people probably think they are just "working the Google on the Internet Machine."

Ross Johnson [07.11.07 01:03 PM]

A very good read, Yahoo is a great company and own a lot of great site, they deserve better then being labelled as out of date.

moxie [07.11.07 01:13 PM]

The devils are in the details. It applies to Yahoo too. Even though Google is more and more towards Yahoo's model, which makes users stay on its site as long as possible, it also takes care of details. For example,dealing with email spam. By default my gmail account filters out 90% of spams and inbox is very clean. At yahoo email, however, without setting up anti-spam, the inbox got flood till the point I'm ready to give it up. What really counts, in my option, is in the small details.

soxiam [07.11.07 04:18 PM]

I found this article to be original and though-provoking but with an utter sense of failure as a proposal for business approach. "Dont' be evil" is a marketing spin - both internally within google campus and as a public-facing mantra. It's a wonderful spin and it's been tried out before (Apple vs. MS, etc.). Such strategy might gain Yahoo some short-term mindshares but I doubt it will ever, even when executed to perfection, have any impact on their bottom line. Personally I wish Yahoo will actually take the peanut butter manifesto to the next level and sharpen their focus on one arena where they feel they have a genuine chance of winning the battle (namely the social content space). They're too thinly spread out trying to tackle competition from google on all fronts. Ironically I see google making the same mistakes that yahoo made. They're trying to enter every space where there's monetizeable data to be controlled. And if they stay on the current track, I believe google will find it harder and harder to not be evil.

Anonymous [07.12.07 06:37 PM]

It's continually amazing to me how much financial ignorance there is among tech bloggers. $3.75bn in profit? That "gross profit", which is the net revenue before any operating expenses and r&d. See http://finance.google.com/finance?fstype=ii&q=YHOO. There you will notice that operating income and net income are really much closer to what you want. It's significantly lower, and when you compare to GOOG, you will see how different these companies really are from teh point of view of profitability.