digg

Join DiggAbout

Discover the best of the web!
Learn more about Digg by taking the tour.

How Yahoo Lost its Way - By Investing in Google

mercurynews.com — Almost eight years ago, Yahoo decided to lend a little start-up a helping hand, featuring its search technology on the Yahoo home page and giving it money at a critical juncture. That start-up was called Google.

Bury
show profanity settings
expand all
  • anaesthetica, on 03/17/2008, -20/+33This is a fascinating story I never knew about. Other accounts of Google's rise don't seem to include this interesting early relationship.

    It reminds me of the early relationship between Apple and Microsoft, when Microsoft was writing code for Apple and Steve Jobs showed Bill Gates some upcoming technology in confidence. Gates, of course, then turned around and ripped off the Mac interface, created Windows, and the rest is history.

    I guess there are always these nascent possibilities in early relationships, and you can completely miss the potentialities inherent in them until it's far too late. A good lesson.
    • elfprince13, on 03/17/2008, -2/+15the classic scene from Pirates of Silicon Valley :)
    • taforever, on 03/17/2008, -3/+57Didn't Apple steal the "Mac Interface" that you speak of from Xerox - PARC, the same way that Microsoft stole it from them?
      • hoodedrobin, on 03/17/2008, -4/+47Yes. But dont tell the fanboys.
      • saucedmike, on 03/17/2008, -11/+1Not really steal, they bought the right to use it
        • coolxal, on 03/17/2008, -2/+12Really? Then why did Xerox try to sue Apple for using a similar interface?
          • saucedmike, on 03/17/2008, -2/+6"Jobs and several other Apple employees including Jef Raskin visited Xerox PARC in December 1979 to see the Alto computer. Xerox granted Apple engineers three days of access to the PARC facilities in return for selling them US$1 million in pre-IPO Apple stock (approximately US$18 million net)."
          • jabberwolf, on 03/17/2008, -0/+1SAUCE you fanwacker !
            They were investing in Apple yes, but that didnt mean that Apple had the right to hire away Xerox engineers from PARC and steal their technology.
            Xerox was investing in NEW technology that would be invented by OTHERS.
            Xerox was not in the business for investing in companies that would use their steal xerox's IP and claim it as their own technology.
      • Continuum, on 03/17/2008, -0/+6Well, Xerox PARC stole the idea from Engelbart's NLS. Xerox PARC was not the first WIMP GUI.
        (Holy Zombie Jesus, we geeks love our acronyms)
      • yingjai, on 03/17/2008, -2/+2forget about mac and xerox stealing ideas and interfaces. the real devil here is microsoft!! those theiving bastards!
    • krusader3z, on 03/17/2008, -0/+5Movies, you enjoy them :-)
    • HaloZero, on 03/17/2008, -0/+13Hey, utilizing a good idea is not necessarily stealing. That type of thinking limits technological innovation.
    • shakin, on 03/17/2008, -2/+10"This is a fascinating story I never knew about. Other accounts of Google's rise don't seem to include this interesting early relationship."

      That's because the article falsely claims that Yahoo helped Google more than Google helped Yahoo. In 2000 Google was already widely known as the best search engine and Yahoo paid Google for the rights to include Google results for Yahoo searches. Yahoo included the Powered By Google logo to indicate where their search data came from. If anything, this saved Yahoo from losing market share sooner because they had great results.

      Then this Hollywood ***** comes in and insists Yahoo develop their own search technology and now look at where they are. They couldn't build a better search than Google so they lost. If Yahoo had kept using Google search results they could have driven traffic to all the other Yahoo properties that are so good like the games, sports, finance, and other Yahoo sites.
    • pw378, on 03/17/2008, -0/+3Another little know fact, Google used to provide the backend for Microsoft search as well until just before the Google IPO. True story. Google was THE backend for Google, Yahoo, and Microsoft back in 2004 and earlier.
  • TheAssuager, on 03/17/2008, -18/+3HI MOM!
    • ileftfark, on 03/17/2008, -1/+12Hi baby! I told you to take your medication, put on your helmet, and STAY OFF THE INTERNET! Now, come to mama!
  • diggduggj, on 03/17/2008, -1/+19I read about this a while back, interesting story. I bet some people at Yahoo are still kicking themselves for this one.
    • Rapter09, on 03/17/2008, -1/+12Well, I do wonder how many of those same Yahoo employees now work for Google. Lots of cross-pollination goes off between the big companies of the Valley, and I doubt they're all that bitter about it anyways.
    • fkr3, on 03/17/2008, -1/+13Yeah... they're only being offered like 40-something billion for their company. Stupid, poor bastards.
    • Devrdander, on 03/17/2008, -0/+7Actually Yahoo! Search didnt come around till about 2004. Before Google they used AltaVista, during the dot com boom a company bought out AltaVista and tried to make it a competitor to the Portal which was known as Yahoo. Yahoo switched to Google to provide its search results. Consequently AltaVista let their search system go to hell and lost a ton of business to Google not just yahoo. in 2004 AltaVista had made substantial moves to revamp its search engine however it was too late and Google had dominated the market. Yahoo swooped in and bought out AltaVista and rebranded it as Yahoo! Search. This also around the same time that google went from mostly search to a full on Portal with email and Stock Quotes etc.
    • pw378, on 03/17/2008, -0/+3Yahoo! would have done much better if they had kept Google as their backend search. If your searches on Yahoo! gave Google results, why change your search page to Google... then Yahoo! could have kept a significant share of the advertising revenue and made a ton of money.

      Think about it, if Yahoo made over a 70% share on all advertisements Google provided on Yahoo results, they would have made more money than they do today given that their search market share has declined by over 50-75% in the past 4 years....

      The great thing about Google, is they only make money if their partners do. Yahoo! got greedy and wanted all the money for themselves and had to spend billions to try and do it, then lost their ass... Ditto for Microsoft (who used to use Google results as well).
      • Devrdander, on 03/17/2008, -0/+1You must have forgot that yahoo did a paid directory they showed you before they showed you the google results.
  • DeathJux, on 03/17/2008, -2/+6Yeah, there was definitely nothing for Yahoo to gain in using Google search technology on their homepage...

    ...
    • dreamlayers, on 03/17/2008, -4/+2What could they gain? If someone wanted to perform a Google search, why not do it from Google's site?
      • hmunkey, on 03/17/2008, -0/+2Well, the thing is that right now Yahoo!'s main downfall is its search. People have come to look at Google as accurate and effective, not Yahoo!.
  • Artemisian, on 03/17/2008, -2/+5Definitely an interesting article. The seedy underbelly of the big online corporations is always fascinating.

    I don't quite see the parallel to Microsoft; though as one not well-versed in business, maybe I just don't see it. Yahoo! was kind and gave Google a chance; Google didn't steal anything from them. Maybe it didn't behave politely, but there didn't seem to be any true backstabbing involved.

    But hey, correct me if I'm wrong.
    • pw378, on 03/17/2008, -1/+1Google was a great partner for Yahoo, until Yahoo got greedy and wanted all the money for themselves then wasted billions aquiring and refining a search engine that was not even half as good... as a result they lost market share and even more money...
      The real story here is Yahoo!'s greed.
  • digggggggggg, on 03/17/2008, -1/+7No, Yahoo lost its way when it hired that incompetent Semel, and taking years to figure out that the guy just wasn't up to the job.
  • slamm71, on 03/17/2008, -3/+3You'd think Yahoo might learn from it's mistakes, yet they just screw up time and time again.
  • Tehrooni, on 03/17/2008, -6/+24What the story does not mention is the substantial IQ difference between the two companies. The only reason Yahoo got as far as it did is because they were among the first Internet companies, so they had a role in everything. But Yahoo has always been a dumb company, where as Google is one of the smartest companies ever. Yahoo does everything the hard way, the expensive way, the wrong way. And everytime they create something successful, they go and screw it up in an attempt to make it even better. Google has always been sleek, fast and very smart. They had vision, know-how and courage. Yahoo owes Google much more that Google owes Yahoo. Those 4.2 million shares that they cashed in 2006 for a 1 billion dollars, they got for practically peanuts. And it saved them from possible bankruptcy. Their most stupid move (which is glorified in this article) was buying that ***** company Overture.

    • fkr3, on 03/17/2008, -7/+2If Google's so smart why is most of their stuff unsuccessful and/or a direct result of buying a company that *was* smart?
      • Tehrooni, on 03/17/2008, -2/+6Google has only one money making product, but the success of that one product is the collective result of the other 30 or something products that have made Google what it is today. So take their News or Google Earth or Gmail for example. These are all losing money, but they attract people to Google. It's all part of branding, building reputation and customer loyalty. Google's business approach has been absolutely ingenious.
        As for buying other companies.... They buy only smart companies so they just get smarter and smarter. Another ingenious approach. Microsoft on the other hand started out as a very smart company, but they have been dumbed down by their expansion and acquisitions. Buying yahoo will probably be a major step towards the grave.

      • NathanielJ, on 03/17/2008, -1/+2Care to post a source or any kind of information regarding "unsuccessful" Google employees?
        • fkr3, on 03/17/2008, -1/+1Reality. They have almost no marketshare in almost all of their products. They dominate search and advertising but have consistantly been unable to attract their users to other offerings except for YouTube which was huge before they bought it. They do have some awesome products like Google Earth but they've got a lot where they don't really bring anything special to the table to differentiate them from their competitors.
          • NathanielJ, on 03/17/2008, -0/+2Apparently I can't read and think that "stuff" says "staff". I still disagree with you, but less so.
        • drugged, on 03/17/2008, -0/+4Well, there is Google maps - pretty much shoved the early players (Mapquest) out to pasture. And there's Google finance - way better than the rest, with some really great features like linking financial news to stock charts. They've got great things like Google Zeitgeist, which has been around forever, but never stops being interesting. Gmail beat the crap out of everyone else overnight.

          Everything they do makes Google better and it all generates ad revenue. Google's probably not perfect, but for a company that grew so massive and so important so quickly, I'd say they're doing a pretty great job.
  • jdh24, on 03/17/2008, -8/+4good. yahoo is a train wreck. just look at its home page. yahoo is a loser. i think i'll sue them.
  • bingobongony, on 03/17/2008, -8/+2The way things have been going since November, if Microsoft's waits a little longer, they will be able to get Google for cheaper than Yahoo!
  • fani, on 03/17/2008, -4/+5I like Yahoo over Google, but 2 things -
    1. Yahoo tried a failed business trick by helping Google and Google happily climbed on its back and killed it.
    2. Yahoo has piss poor execs running the show.
    • 9mmCensor, on 03/17/2008, -2/+71. Yahoo invested in Google, and by doing so profited handsomely. They did so to make money (which latter funded Yahoo! when the sold their Google shares), and did a good job at predicting the great success of Google.
      • fani, on 03/17/2008, -2/+2What a great business model !! let me help my very competitor in my very own up-and-coming field. Its not like they'll ever grow big and become a threat to me..

        /sarcasm.
      • juventus1, on 03/17/2008, -0/+1i was hoping someone would say this eventually.
        it was a good move investing in google... yea, the longterm wasnt the best, but its not like yahoos bankrupt..
  • v1c1ous, on 03/17/2008, -1/+2some of the greatest assets in life were someone's missed opportunity
  • digggthat, on 03/17/2008, -4/+1looks like the tables have turned
  • Devrdander, on 03/17/2008, -1/+20Everyone forgets that before they used google they used AltaVista for search results, Yahoo wasn't a search engine it was a portal. In 2000 during the dot com burst AltaVista was trying to compete with Yahoo by providing portal content like mail and stock quotes etc. It was at this time that Yahoo made the switch to google to provide their search results. A few years later Google started offering things like Gmail and yahoo decided to try and cut that bond.
  • amanilaenvelope, on 03/17/2008, -7/+1its like nazi germany giving ***** of guns and ammo to america back in 1944.
    • coolxal, on 03/17/2008, -0/+3I think you mean the USA giving supplies to the Russians during the second World War.
  • Locke23, on 03/17/2008, -2/+11... and the student surpasses the teacher.
    • inverselogic, on 03/17/2008, -0/+0Sort of like Sidious and Plagueis!!!!!!!
  • skyz, on 03/17/2008, -1/+2google had / has the clearer vision but it seems that having the clearest vision is a temporary asset
  • cozb, on 03/17/2008, -0/+21uh, the better story would have been how Excite passed up to buy google for $1mil
  • amanilaenvelope, on 03/17/2008, -0/+3i was just seeing this show the discovery channel about the rise of google and yeah excite is pretty stupid to pass the $1 million dollar deal
  • mediaspree, on 03/17/2008, -0/+9I remember seeing this "powered by google" on yahoo.com search, and then going to google.com for my searches...never looked back.
  • Crisender111, on 03/17/2008, -0/+4How Yahoo lost its way.........& how the world found a new, better one!
  • mrnoodle, on 03/17/2008, -0/+1Yahoo should just sell itself up and purchase more google shares.
  • FizzanoMatrix, on 03/17/2008, -3/+1The funny thing is no one remembers Yahoo helping out a little firm called Teldar Paper a few years back, and look where they are now! Seems like Yahoo should have been channeling their stock through an intermediary, preferrably one with an above Bb credit rating such as the Anacott Steel Hedge Fund..
  • dareyoutomove, on 03/17/2008, -2/+1oops
  • vixnbrianaf, on 03/17/2008, -1/+4Excite actually had the opportunity to buy out google before it became what it is today, for a cool 1mil. Do you guys understand how much those idiots lost out on??? Yahoo may have been first, and was brilliant for its time but google blew them out of the water. Did ya'll also know all of the developers of each of the mentioned search engines also attended Stanford?
    • pw378, on 03/17/2008, -0/+4Google would not have been the Google we know today if Excite had bought them....
  • drugged, on 03/17/2008, -3/+4Every time I see one of these Yahoo stories I feel like I've crossed over into an alternate reality. Now Google's to blame? Seriously, considering that Google became popular almost overnight (by '99 just about everyone was already using Google), and before Google, there was Alta Vista, I don't see how anyone could give this story any credence. Yahoo lasted as long as it did by making a lot of noise and raising a lot of money during the dot com boom, but they never really did anything useful for anyone. Honestly, i have no idea why Yahoo seems to mean so much to these people, back in the day it wasn't much more than a bizarre, unpleasant website, with a list of seemingly random web destinations (http://web.archive.org/web/19990117053926/http://y ... it was a website that any 15 year old could have come up with - and today it's really no different. I don't get why people keep acting like the creation of Yahoo was some seminal event in the history of the web.
    • Devrdander, on 03/17/2008, -1/+4Its because most people have the memory of a gnat these days and forget what happened a decade ago...
    • burgermind, on 03/17/2008, -1/+2It's good to see that the drugs haven't damaged your memory!
  • iPoul, on 03/17/2008, -0/+2Google is my friend.
  • hackiavelli, on 03/17/2008, -0/+3I like how the article frames it as Google doing something wrong rather than Yahoo making some incredibly bad business decisions. Yahoo wasn't giving money to Google in the early years out of the kindness of its heart. It was a business relationship.
  • nikiri, on 03/17/2008, -0/+0I think I'm going to start using Yahoo..
  • natgem, on 03/17/2008, -0/+0It's too bad that Yahoo! didn't take enough risks. It seemed that Google was unafraid to take initial risks to broaden their search engine, while Yahoo! seemed to hang in the background and watch everything unfold. It's unfortunate that Yahoo! didn't have a better CEO in the beginning; maybe if they had, then they would be the #1 search engine.
  •  

    Login or register to add a comment

    Create a new account or login to join in the conversation on Digg. You'll also be able to Digg stories to help promote things you like.


© Digg Inc. 2008 — Content posted by Digg users is dedicated to the public domain.
DIGG, DIGG IT, DUGG, DIGG THIS, Digg graphics, logos, designs, page headers, button icons, scripts, and other service names are the trademarks of Digg Inc.