CEO Marissa Mayer is broadening, not narrowing, Yahoo's scope
After buying Tumblr, Yahoo is reportedly in talks to acquire online-television hub Hulu
Yahoo is transforming itself into an über portal even as users migrate to focused mobile apps
But it’s becoming increasingly clear that Mayer is broadening, not narrowing, Yahoo’s scope, cementing its once passé reputation as the original internet “portal.”
The latest sign of this trend came just this past weekend, when multiple reports had Mayer in talks to acquire the online television hub Hulu. Less than one week earlier, Yahoo announced it would pay $1.1 billion for microblog network Tumblr. Two months ago, the company paid a reported $30 million to buy news digest app Summly from a British teenager.
The common thread: Yahoo keeps expanding into new areas, even though it was already a sprawling internet conglomerate when Mayer took control, with everything from movie listings to stock quotes to a photo-sharing social network to a news hub to a search engine. (And don’t forget the “OMG!” section.)
Yahoo’s mission creep is a useful case study in why web companies like Google and Facebook continue to grow their functionality and why startups keep selling to the seemingly bloated leviathans, even though tech advances have made it cheaper and easier than ever for software companies and web services to go it alone, and despite the fact that consumers are migrating to highly specialized mobile apps.
Once upon a time, the idea of agglomerating lots of functionality in one website seemed like an obsolete throwback, a vain attempt to carry forward the glory days of the online portal in the late 1990s. Portals had their time and place, but it was in the past, the thinking went, during a transitory period when it was expensive to build the most basic interactive website. That financial barrier gave well-capitalized internet companies the opportunity to dominate many verticals at once.
The way of the future was going to be focused sites, like Google.com, whose ultra-bare homepage was about nothing but search (and whose guardian angel of minimalism was reportedly named Marissa Mayer).
At one point in 2006, a top Yahoo executive even issued a famous memo comparing Yahoo’s extremely broad offerings to peanut butter, “a thin layer of investment spread across everything we do and thus we focus on nothing in particular… We lack a focused, cohesive vision for our company.” Interestingly, that executive, Brad Garlinghouse, has since recanted his diagnosis of Yahoo, saying the company’s real problem was a lack of “passion and entrepreneurial zeal.”
So why is Yahoo in the midst of purposely transforming itself into an über portal even as computer users are migrating to super-focused mobile apps and even when its leader made her name touting simplicity and minimalism? And how did Google, once the poster child for focus, end up as a sort of accidental portal, with its own social network, webmail site, online map, and video sharing service, to say nothing of its smartphone manufacturer or set of operating systems?
Because we live in a world where the most valuable information – and especially the demographic and tracking data coveted by online advertisers – does not want to be free, and in fact is hoarded in proprietary databases that can only be assembled if you’re a portal, or look a lot like one. Or at least this is part of the reason.
Consider Google. The company historically derives virtually all its revenue selling ads around keywords, either the ones you type into its search engine or those you embed in your email messages and web pages. But then Facebook came along and began selling ads around social information, like your birthday, what movies you like, and whether and where you want to college. That turned into a multi-billion-dollar business. Then Apple came along and released the iPhone, which has helped turn mobile advertising into another multi-billion-dollar business.
Both of these new online ad businesses threatened to replace or at least disrupt Google’s bread and butter keyword ads. And Google was locked out of them; the company can’t get at your social data on Facebook, and by default it doesn’t get your location data or Siri searches on the iPhone. While certain data is freely or routinely shared on the internet — IP and email addresses, search keywords you click on, browser and operating system identifiers — social and mobile data is locked away. So Google went out and built its own social and mobile silos. The results have been mixed, but it’s better than nothing.
Hyper-focused startups face the same dilemma. Consider the Israeli mapping company Waze. Waze makes an app that lets you easily share and v