Why Yahoo is Right and the Media Majority is Wrong

justsaynojerryPerhaps it is possible you were not aware Microsoft was attempting to acquire Yahoo. I would wager that this has been the number one story in the tech community since February and most suggested Yahoo would be foolish not sell. Some felt that the internet had passed by the company, while most purely view this as a financial story. Meaning take the fast money now instead of building and maintaining a pillar of the digital world.

I have been outspoken about the ignorant and short sighted view of nearly everyone in the media, however I became incensed with this highly questionable post on TechCrunch after Yahoo announced its partnership to outsource a portion of its search advertising to Google that effectively ended any potential deal with Microsoft. This motivated me to finally outline publicly why Yahoo made the best deal for the longevity and health of the company. I am also an active investor that is disgusted by those who seek short term profits versus decisions that will strengthen a company for the long term. Invest in a company you believe in and want to see succeed in business, not to cash in quick by stripping the company of all its assets. Here is my reply to the TechCrunch article:

Beginning of the end for Yahoo? It is beyond me why the media keeps suggesting Yahoo and Google are in the same business and that search is everything. Google does one thing well. The majority of their products are worthless. Yahoo is a content portal. It has the number one site for Finance and Sports (by traffic) and the top email. They also lead the industry in display advertising, which is significantly more important/useful for marketers. Search ads…seriously, who is really clicking on this. If Microsofts CPA model catches fire, advertisers will revolt against the fraudable CPC model of Google.

Surely Yahoo is going to only farm out the low profit search terms to Google to maximize revenue. Yahoo is using Google as a tool because thats all they are. Beyond all of that…why is there not more discussion on Google diversification. Everything it does that provides revenue is tied to search. Thats great when you have the best search, but there has been plenty of articles outlining how the industry can be improved and if Google cannot figure it out, the house of cards falls down.

 Yahoo is fine. It hovers between the number one or two most visited site in the world. Unlike social networking sites, it also has a clear and viable way to monetize this traffic. One being display advertising, which Yahoo is the industry leader. Why would they sell to a company scrambling to find its place online that would only dissolve the Yahoo name in a few short years (much like the iconic Kinko’s that is now no more). I am not the only one who feels this way though as it looks like even Carl Icahn is warming up to an independent Yahoo. Moreover, Google is not going to eat Yahoo nor should this deal bring about antitrust concerns. Search is not the end all be all for the internet as TIm O’Reilly states and the two companies are not really competitors. Yahoo creates content. Google does not. Google is a tool, while Yahoo is a destination. Yahoo has interesting new products such as Yahoo Buzz (a Digg killer) and Go 3.0 and I expect the company to still be a thriving and relevant five years from now.


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