Wow. Wow. Wow. That’s all that keeps running through my head as I digest the news that long-time Google executive Marissa Mayer is to take over as president and CEO of Yahoo. Smart move for Mayer. Smart move for Yahoo. And as I’ll explain more, perhaps a move that finally takes Yahoo out of the search game, but takes it out in a smart way.
A Force To Be Reckoned With
I’ve known Mayer since she started at Google in 1999. Until she moved off of being vice president of search in 2010, Mayer was the Google executive I had the most contact with. When we were first introduced, my reaction to Google PR after our initial meeting was something like, “Where did she come from, and where have you been keeping her?” She was clearly driven and deep in the product details of search.
In her time, Mayer oversaw Google’s rise to being the most used search engine on the planet. Then she moved over to being vice president of local, maps and locations services, and where while there were some successes, it mainly felt like she’d been shuffled off to the side. That’s especially so when some of those services seemed confused with or consumed by both Google+ and Android.
What Do You Get The Google Exec Who Has Everything?
Given this, the idea that Mayer is jumping ship is no surprise. Similar to other Google execs like AOL CEO Tim Armstrong or Facebook COO Sheryl Sandberg, what do you get the Googler who has all the wealth and tech fame they could hope for? A new company with big challenges to play with, out from under the shadow of Google, where you can prove that your success was clearly due to your own skills and not being in the right place at the right time.
Sandberg’s got the biggest claim to success so far, taking Facebook public and serving as the “adult supervision” to CEO Mark Zuckerberg similar to how Google executive chairman Eric Schmidt did when he first joined GOogle as CEO.
Armstrong’s still struggling to prove that AOL has a future that even somewhat resembles the the massive role it once played in the internet space. His challenge is closer to what Mayer is now taking on. Yahoo has significant content assets. It still has a huge audience. But it has been faltering. Can she halt both the real and perceived descent of the company?
Yahoo’s Stumbles In Search
One of the biggest drops Yahoo has suffered as been with search. Idiotic shareholders first torpedoed the company. The US Department Of Justice fired a second salvo harming it. Former CEO Carol Bartz helped seal its fate, though she almost had no alternative. I see Mayer as likely looking at the floundering efforts in search and declaring an end to salvage operations, in order to keep the rest of the Yahoo’s fleet focused on success.
Let’s go back, starting with the idiotic shareholders. Yahoo’s “Panama” search advertising platform didn’t produce the earnings that investors (and Yahoo itself) were looking for after it launched in late 2006.
Even though Yahoo was still earning plenty of money, even though Yahoo was the solid number two behind Google (with everyone else including Microsoft way off in the distance), investors weren’t happy. So in 2007, we lost Yahoo’s CEO Terry Semel and by 2008 had a proposal for Microsoft to buy Yahoo, one that Microsoft pushed against Yahoo’s will.
Enter Google, offering to save Yahoo by powering some of Yahoo’s search ads and allowing Yahoo to keep its own search technology. While the Microsoft and Google deals were debated, some of the best brains at Yahoo started leaving. Former search czar Jeffrey Weiner. The founders of Flickr. The founder of Delicious. Yahoo search vice president Sean Suchter over to Microsoft.
The deal with Google was called off, because the Department of Justice threatened anti-trust action if it went ahead. Nice job, DOJ. Ruling Google out meant there was only one other company that Yahoo could turn to for the search deal that investors still clamored for: Microsoft.
With no competition, in 2009, Yahoo agreed to a search deal with Microsoft, one that went from the earlier deal where Microsoft was buying stock and paying money to effectively just leaving Microsoft with a cut of its search ads sales.
Hearing the terms of the deal, I wrote A Search Eulogy For Yahoo, counting the company out as being a major search player going forward. No company in search had ever succeeded without owning core search technology. Despite what new CEO Carol Bartz pushed, that Yahoo would win with the search interface, I just didn’t see that happening.
Nor did it. Yahoo’s earnings off search weren’t what was expected. Yahoo’s search market share has dropped while Bing has overtaken it. And Yahoo has no “Plan B” as I warned about before, no core search technology or substantial key talent to fall back on.
A Sensible Sunset For Search?
Mayer might surprise me by announcing that Yahoo will refocus on search. But my guess is that she knows the odds are against that. She knows that search companies have won by owning their own search technology and that it’s too late for Yahoo to rebuild its technology at this point, not to mention that under the terms of the deal, it can’t use the tech it gave up to Microsoft for about seven years or so.
Rather, I think she’ll write-off search, not try to reposition Yahoo as a search player (yet again) but taking the Facebook route. There’s search at Facebook, but that’s hardly its main attraction. Similarly, there’s much more at Yahoo than search, and at this point, it makes sense to focus firmly on those aspects.
Renegotiating With Microsoft & Google?
I also suspect she’ll take a hard look at that Microsoft deal to see about renegotiating it, to the degree that she can — and involving new negotiations with Google. The DOJ might reconsider the anti-trust concerns given how its initial action arguably hurt Yahoo and continues to hurt it when Yahoo’s not allowed to seek services from all possible players. Yahoo’s share is also down from what it once was, meaning a Google deal gives it a small additional chunk of the market.
Another question is whether past relationships may help here. Despite Sandberg coming from Google, there’s no good will, spirit of cooperation or “let’s do business together” attitude between Google and Facebook. If anything, it’s the opposite. There’s no guarantee that just because Mayer came from Google that Yahoo will suddenly become pro-Google.
We’ll see. I’ll certainly be watching. After the mess that was Bartz’s reign, followed by the further mess that was Scott Thompson’s less-than-half-year running Yahoo, I’d figured the company would continue on its trajectory downward. Mayer’s appointment is one of the few hopeful signs of a turnaround I’ve seen for ages.
- Yahoo The Failure: Myth Versus Reality
- Yahoo’s Google & Microsoft Deals, Side-By-Side
- Google Cancelled Yahoo Search Deal To Avoid “Monopoly” Designation
- It’s Finally Official, Microsoft & Yahoo Make A Deal, Yahoo Gives Up On Search
- Bartz Continues Torpedoing Yahoo Search
- Microsoft-Yahoo Deals 2008 & 2009, Side-By-Side
- The Microsoft-Yahoo Search Deal, In Simple Terms
- A Search Eulogy For Yahoo
- The Yahoo Search Revenue Disaster
- Confirmed: Marissa Mayer Leaving Google For Yahoo CEO Role
- Mayer’s Appointment Brings Hopes For Stability In Yahoo CEO Role
- Google Reacts: Mayer “Whip-Smart” & :A Tireless Champion Of Our Users”
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