The Big 7 Strategic Blunders of Yahoo based on Public Facts
1. Yahoo Struggles with Competition (for Email Storage)
Yahoo began using Google for search in June 2000. Over the next four years, it developed its own search technologies, which it began using in 2004 partly using technology from its $280 million acquisition of Inktomi in 2002. In response to Google’s Gmail, Yahoo began to offer unlimited email storage in 2007. In 2008, the company laid off hundreds of people as it struggled from competition.
2. Yahoo Rejects Microsoft Bid
In February 2008, Microsoft made an unsolicited bid to acquire Yahoo for $44.6 billion. Yahoo rejected the bid, claiming that it “substantially undervalues” the company and was not in the interest of its shareholders. Although Microsoft increased its bid to $47 billion, Yahoo insisted on another 10%+ increase to the offer and Microsoft cancelled the offer in May 2008.
3.1 Frequent CEO Replacements and Firing of Senior Executives
Carol Bartz, who had no previous experience in Internet advertising, replaced Yang as CEO in January 2009. In September 2011, after failing to meet targets, she was fired by chairman Roy J. Bostock; CFO Tim Morse was named as Interim CEO of the company. In April 2012, after the appointment of Scott Thompson as CEO, several key executives resigned, including chief product officer Blake Irving.
3.2 More Layoffs at Yahoo
On April 4, 2012, Yahoo announced 2,000 layoffs, or about 14% of its 14,100 workers by the end of year, expected to save around $375 million annually.In an email sent to employees in April 2012, Thompson reiterated his view that customers should come first at Yahoo. He also completely reorganised the company.
4. Appointment of Marissa Mayer as CEO
On May 13, 2012, Thompson was fired and was replaced on an interim basis by Ross Levinsohn, recently appointed head of Yahoo’s new Media group. Several associates of Third Point Management, including Daniel S. Loeb were nominated to the board of directors.Thompson’s total compensation for his 130-day tenure with Yahoo was at least $7.3 million.On July 15, 2012, Marissa Mayer was appointed president and CEO of Yahoo, effective July 17, 2012.
5. Failed Tumblr Acquisition
In June 2013, Yahoo acquired blogging site Tumblr for $1.1 billion in cash, with Tumblr’s CEO and founder David Karp continuing to run the site. In July 2013, Yahoo announced plans to open an office in San Francisco.On August 2, 2013, Yahoo acquired Rockmelt; its staff was retained, but all of its existing products were terminated.
Data collated by comScore during July 2013 revealed that, during the month, more people in the U.S. visited Yahoo websites than Google; the first time that Yahoo outperformed Google since 2011.The data did not count mobile usage, nor Tumblr. Mayer also hired Katie Couric to be the anchor of a new online news operation and started an online food magazine. All these still did not help Yahoo in the long run and failed to make an impact
6. Struggles of Marissa Mayer
However, by January 2014, doubts about Mayer’s progress emerged when Mayer fired her own first major hire, Henrique de Castro. On December 12, 2014, Yahoo acquired video advertising provider BrightRoll for $583 million. On November 21, 2014, Yahoo acquired Cooliris.
By December 2015, Mayer was criticized as performance declined.Mayer was ranked as the least likable CEO in tech. On February 2, 2016, Mayer announced layoffs amounting to 15% of the Yahoo! workforce.
7. Data Breaches at Yahoo
On February 21, 2017, as a result of the Yahoo data breaches, Verizon lowered its purchase price for Yahoo by $350 million and reached an agreement to share liabilities regarding the data breaches.
Verizon Acquires Yahoo
On July 25, 2016, Verizon Communications announced the acquisition of Yahoo’s core Internet business for $4.83 billion.The deal excluded Yahoo’s 15% stake in Alibaba Group and 35.5% stake in Yahoo Japan.On June 13, 2017, Verizon completed the acquisition of Yahoo and Marissa Mayer resigned.Yahoo, AOL, and HuffPost were to continue operating under their own names, under the umbrella of a new company, Oath Inc., later called Verizon Media.
Apollo Global Management Acquired 90% Stake in Yahoo
The parts of the original Yahoo! Inc. which were not purchased by Verizon Communications were renamed Altaba, which later liquidated, making a final distribution in October 2020. In September 2021, investment funds managed by Apollo Global Management acquired 90% of Yahoo.
Yahoo Ceases Operations in China
In November 2021, Yahoo announced that it was ceasing its operations in mainland China due to an increasingly challenging business and legal environment. Previously, the company has discontinued China Yahoo! Mail on August 20, 2013.