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Yahoo Using Google: I Am Not Sure This is A Good Idea

By - September 15, 2007

Those of you who’ve stuck with Searchblog through the thin years (er, that’d be now) and in the thicker ones (03-05), may recall my repeated suggestions to Yahoo and Microsoft that they gang up on Google by combining their search and search advertising assets. Others have suggested Yahoo simply cede the game to Google and go back to how things used to be: In other words, let Google serve search and contextual advertising results. Eric over at Barrons reports on the latest of these, an analyst at Bernstein. From Eric’s post:

Bernstein Research analyst Jeffrey Lindsay has some aggressive advice for Yahoo (YHOO) CEO Jerry Yang. He thinks the company’s current slow and incremental approach to fixing the business is actually a risky strategy; he says Yahoo’s large customer base “has been flat for some time and is starting to fray at the edges.” The danger is that moving slowly will allow Yahoo’s subscriber metrics to deteriorate, damaging the value of the business.

Lindsay’s advice: outsource search to Google, and cut staff by as much as 25%. He thinks the company could boost 2008 operating income by $565 million, and EPS by 24 cents, by outsourcing search; cutting a quarter of the staff could add another $658 million in operating income, and another 28 cents in EPS, he figures. He also contends Yahoo needs to restructure its display advertising business to boost growth to the industry average; if they can do that, he writes, the company can add another $376 million in revenue and 15 cents in EPS.

I’m not sure this is a good idea. AOL has not managed to build much on top of that strategy, at least in terms of growing profitability (it did for a while, but the trend is now not good). And Yahoo has a ton of sunk resource into its current strategy.

Instead of the typical Wall St. prescription above – cut costs, cede markets where you are a distant second – I’d say do the opposite: Declare war, rally the troops, and spend like hell to win. At least you’d go out fighting, and there’s a good chance you’d win.

I still think that kind of a war could be fought by combining the armies of Microsoft and Yahoo.

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Yahoo MASH

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Sigh. I was invited in last night. I went, I corrected the spelling of my name, I noted a few cool features (like how everything is editable), I noted a few irritating ones (the voice of the site is ….trying too hard), and then, I got SNF. Social Network Fatigue.

I wish Mash well. I really do. I just can’t get up for it.

Google Gets Out Front of Privacy Issue

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Google today called for universal privacy standards. I applaud the call, but suspect not much will come of it (despite support for the APEC Framework), not due to Google per se, but the fact that we don’t have standards for universal power plugs, much less something as politically charged as privacy. But it’s great to see the company lead here. More from ars.

Yahoo, Open?

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Look, I love Yahoo. Hell, I love em all – from AOL to Microsoft and all the G’s in between. Otherwise, what’s the f’ing point of spending so much time thinking about them?

But let’s be honest. Yahoo, like every other company I love, has not totally embraced open, any more than its competitors have. In other words, Yahoo and its kin have a complicated relationship with open. It’s the classic question: can we make enough money from being open to justify the money we might lose? (Bizweek story)

Could Yahoo do what Facebook is doing – allow anyone to build an app where *all the money stays with the developer*?

Um. No. That’s really open. And that ain’t happening. Any more than AT&T is going to let you build apps on its mobile network without a vig.

Two years ago I was invited to give a talk to Murdoch’s senior executive team on the theme of the Internet. I suggested that the company take all the video IP it owned, and set it free – open it up, in other words.

I still think the first to do this – and CBS EVP Patrick Keane, a former Googler, said his company was totally open to that at the CM Summit this week – will win.

But true openess ain’t this:

Yahoo brass say they are now taking openness to the next level. For example, the test version of the new My Yahoo lets users link to Google’s (GOOG) e-mail service, Gmail. It also includes widgets—known in Yahoo-speak as “modules”—from partners such as Netflix (NFLX) and The New York Times (NYT) that let users choose to see movies and read stories from their customized homepages.

It’s just not. Sorry. Don’t be half pregnant. Bet the company, Yahoo. What the hell!

Google and Health

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Adam Bosworth leaving Google was interesting news, but somehow not surprising. I’m not sure why, but it struck me that Adam was never that engaged. He was the man behind much of Microsoft’s future OS plans, he came to Google, and then he ended up…working on Health? Seemed like a parking spot on the way out, in retrospect.

Now comes rumors that Google might buy WebMD. If I were writing two years ago, I’d say no way. Google isn’t in the content/customer service/editorial business. But now, well, I guess I could see it. Things have changed. YouTube was a major move to the “we’re a media company” hoop. Though it was entertaining to hear Rishad Tobaccowala, CEO of ad consultancy Denuo, and David Lawee, VP of Marketing at Google, debate the issue on stage at the CM Summit yesterday (David insisted Google is a technology company, Rishad dismissed the claim with a flourish. Or two.)

So why not buy WebMD? The company can afford it. Microsoft bought Medstory. Google’s own plan for health, which Adam outlined to me months ago, is quite interesting, but might benefit from some built in content.

Strikes me, though, that in the end this would be a bad move. Why not just partner? And if you can’t partner, and feel like instead you have to buy, it might be time to step back and ask – what is it that makes you not able to partner? In the end, you can’t buy everything…