May 6, 2008 04:40 PM
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Tue Feb 9
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Jerry Yang's spin campaign about why the Microsoft bid fell through is transparent. He's not trying to cajole Steve Ballmer back to the negotiating table; he's trying to cover his rear and appease indignant shareholders. The only reason he's so open about accepting a new bid from Microsoft, I think, is that he's not expecting another one to come. Ballmer has more or less said he thinks that Yahoo is worth less and less every day; last Saturday, when Yang flew up with cofounder David Filo to meet with Ballmer one last time, was as close as the two will ever get to agreeing on Yahoo's worth. The thing is, unless Yang makes some dramatic shifts, Ballmer may well be right.
Microsoft remains obsessed with Google's dominance in search. Its brightest minds are confounded by its inability to catch up; they saw acquiring Yahoo as a way to instantly bulk up, and apply their algorithms to a larger database of searches.
But that presumes that all we do, all day long, is search the Web. The truth is search is just one of many online activities. When Google got to it, early pioneers like Yahoo had neglected it, leaving much room to exploit and improve Web search.
Yahoo and Microsoft both might do well to take as a given that Google will dominate search for the foreseeable future. Consumer inertia will dictate that, if nothing else; trying to make search ever fancier is a sure way to keep Google as the search engine of choice. Feature-obsessed Microsoft engineers will likely lard up Windows Live Search with more virtual gewgaws; Yahoo would do well to simply ape Google's simplicity.
The mooted plan to have Google serve some of the ads on Yahoo's search results, but only if they make more money for Yahoo is wise, and not just because it may pass antitrust scrutiny. Yahoo should not abandon the business of contextual advertising, as the art of matching ads to search keywords is known.
Yahoo, in theory, should know more about its users than Google; if it is ever able to apply that data to advertisements, it may well be able to make some searches more profitable than Google can. And Google, with its larger corpus of search queries, may squeeze more dollars out of some searches than Yahoo ever can. Cooperating cleverly doesn't mean giving in; it means maximizing one's profits. Suggestions that Yahoo fire the 2,000 or so employees of its search marketing business and throw all of its text-advertising sales to Google seem to go too far; but perhaps Yahoo should abandon all its algorithmic research and concentrate instead on analyzing its users' online behavior.
Downplaying search, too, seems wise. Jerry Yang says he wants to make Yahoo a set of "starting points" for Web users; but of all the possible ones, an empty search box seems like the least interesting place to start. What can Yahoo add to that blank space? Since Yang and Filo first started picking websites for Yahoo's online directory 15 years ago, they've created experiences for users — "programmed" in the media sense, not the software sense. Even user-generated sites like Flickr have relied on community managers to set the tone and show users what's possible. That has always struck me as Yahoo's strength, and they should build on it.
The biggest criticism of Yang is that he hasn't seemed to found Yahoo's purpose on the Web today. If he just stops searching, perhaps he'll find it.
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