The resignation of Yahoo CEO Jerry Yang on Monday ends what is probably the company's last chance to compete with Google.
Yang, one of the company's founders, stepped down after only 18 months as the chief executive. It was inevitable. Under Yang, Yahoo's stock has lost over $20 billion in value, an ad-sharing deal with Google fell through under the threat of a federal anti-trust suit, there was an exodus of high-level talent, a proposed deal with AOL stalled, and Yang looked like a petulant child who was trying to keep his toys to himself when he rejected an offer by Microsoft to buy the company. In light of all that, it's amazing that Yang wasn't fired sooner.
So what happened? How did Yahoo, one of the first major websites, end up relegated to the bargain bin? Well, it's all Google's fault. Everything is Google's fault. Failing US newspapers, internet piracy, polar bears drowning in the Arctic because of global warming — it's all Google's fault.
Really?
No, not really. Google has been pushing the boundaries of the Internet for ten years now, and while it has gotten burned a few times along the way, it has managed to establish a range of products that are used by millions. They haven't even come close.
A quick comparison of the sites tells the real story. Google has a portfolio of sites that include social networks, videos, email, news and blogs. It doesn't even produce any media. Instead, its sites are crammed with user-generated content and its own in-house advertising systems.
So what does Yahoo have? Well, they have news and email, but who doesn't? They have a financial section, which is far better than anything Google has, but Yahoo's attempt at a social network, dubbed Yahoo 360, looks like MySpace used to about three years ago. The sad thing is this is an improvement over the Yahoo that existed when Yang took over.
The cartoonish avatars are, more or less, gone, and there is a good assortment of local features, provided you live in a "local area". I don't. The closest thing the site gives me to a local area is Yahoo Asia.
With Google out of the picture, it's hard to say what's going to happen now. Microsoft CEO Steve Ballmer has said he is still not interested in buying Yahoo. At best, Microsoft is only after Yahoo's search capabilities, which only goes to show the sorry state of affairs in Microsoft's online division. Yahoo's search engine is mediocre at best.
Plus, there is still a lot of bad blood between Micro-soft and Yahoo. Yahoo investors were getting ready to march with torches and pitchforks when Yang turned down Microsoft's $33 a share ($47 billion) takeover bid.
Falling stock
One investment firm has estimated that Yahoo could have been worth $21 a share to Microsoft before Ballmer's comments. Since then Yahoo's stock has dropped to about $9 a share.
One of Yahoo's last chances for a turnaround may rest with another great has-been of the internet: AOL. There have been a few reports that talks are ongoing, but some estimates say that a union between the two would include about 3,000 lost jobs.
Whoever steps into fill Yang's shoes — Yahoo president Susan L. Decker has been named as one possibility, but there are also calls for someone outside of the company to take the helm — is going to be in a very unenviable position.
The new chief executive either gets to prepare the company for a merger or continue to do what Yahoo has been failing at for the last eight years — competing with Google.
