Once Upon a Time, Yahoo Was the Most Important Internet Company
Silicon Valley is full of giants. But one seems to be slowly disappearing. Yahoo was once an Internet titan, a ruler of the web. Now its future appears to be in question.
Investors worry about what will happen to Yahoo once it spins off its stake in Chinese behemoth Alibaba—or if it can’t. Meanwhile, among consumers, Yahoo has an identity problem—what, exactly, does Yahoo do?
These questions have come to a head again over the past week or so as activist shareholders called for Yahoo to sell its Internet business. High profile chief executive Marissa Mayer’s future is being called into question. A wave of executives have left the company in recent months. And even something Yahoo does right—its popular fantasy sports site—is facing scrutiny from New York’s attorney general. It’s been a long slide for one of the web’s oldest businesses—so long that it can be easy to forget that Yahoo once ruled the Internet.
Yahoo was once a trailblazer: it was here before Facebook and Google. It was here before we texted, tweeted, or snapped. Its place in the history of the Internet is in some ways singular: It was for many the first way they experienced the web.
At WIRED, we’ve tracked the ups and downs of the web since its earliest days. In the process, we’ve traced the growth and decline of Yahoo itself—the rise and decline of an Internet original.
Taming the Chaos
Launched in 1994 by Stanford grads Jerry Yang and David Filo as “Jerry and David’s Guide to the World Wide Web,” it soon became one of the most popular sites on the web. Initially a hand-built hierarchical directory of websites organized by category, the site by 1996 had been renamed Yahoo! (with its trademark exclamation point) and its stock soared as it went public. Yahoo! indeed.
In 1996, WIRED editor Steve Steinberg visited Yahoo’s offices to take a look at how exactly it all worked. The company, he wrote, was attempting to “exert some kind of order on an otherwise anarchic collection of documents.” To pull this off, the company collected new URLs—aka web addresses—via a web crawler as well as email tips from users. Twenty human classifiers would decide in what categories each site belonged. That dependence on “human intelligence to organize the web” had its pitfalls, namely subjectivity and scalability. And yet, at the time, “in almost every way you can measure, Yahoo has successfully exerted order on the chaotic Web,” Steinberg wrote.
In the late ’90s, Yahoo had expanded far beyond its roots—it launched an email service, chat, groups, games, and a website platform. (Remember GeoCities?) It also tried to assert itself as a search engine. But search was where the company started to founder. In 2000, the company signed a deal with Google to license the upstart’s search system. “Yahoo was riding high, and upstart Google was hoping to be the next Yahoo,” contributing editor Michael Malone wrote in 2005″ target=”_blank”>wrote in 2005, as he looked back at the company in 2000.
“But then came the dotcom implosion, with Yahoo firing hundreds of employees and seeing its stock price drop from $119 to $4. Now, even though Yahoo’s back, it seems consigned to Google’s shadow.”
While Google focused on search, Yahoo sought to grow into a full-fledged media company under CEO Terry Semel, a Hollywood veteran, in the mid-2000s. Following the dotcom bust, Yahoo had acquired its own search company, Inktomi. But by then, its focus had shifted as Google became the clear leader in search.
By 2005, still under Semel’s leadership, the company had spun up an entertainment division in Los Angeles to add movies and music services to Yahoo’s portfolio alongside its games, news, sports, and financial information resources.
“Semel imagines Yahoo delivering rich content to any Web-enabled device at any time, a vision that could make Yahoo the obvious next step in Hollywood’s Internet strategy,” Malone wrote in 2005. But even then, a decade ago, Yahoo itself had become a company whose mission was tough to define. Malone explained, “it’s just not easy to say what Yahoo is.”
The late aughts were messy for Yahoo—there were even talks of a merger with Microsoft. By 2007, WIRED contributing editor Fred Vogelstein was willing to proclaim that Yahoo “blew it.” Google beat Yahoo at the search engine game. Meanwhile, as Yahoo tried to become a media company, Google had bought YouTube. “Yahoo’s much-watched effort to create an entertainment unit in Hollywood fizzled,” Vogelstein wrote that year. “Worst of all, Yahoo’s long-delayed push to aggressively compete in the search-driven advertising business is only now getting off the ground.”
The company continued to flounder as Google and Facebook encroached on its ad business. In 2012, Marissa Mayer, a successful Google exec, left the company that once had been on Yahoo’s heels to try to help turn one of the web’s oldest giants around.
Despite her efforts, Yahoo hasn’t regained its footing—and, some say, may never find its way. “More than two years after taking the job, Mayer has yet to restore the company’s core business to growth,” WIRED senior staff writer Jessi Hempel wrote last year. “Advertisers and investors alike complain she hasn’t articulated enough of a vision for how she plans to do it.”
Yahoo was once a trailblazer. It was a titan. It was right, actually, about the future of the web. The Internet has become a catalog containing the breadth of human knowledge and information. But you probably use Google to find it. Hollywood has had to contend with the Internet. But you probably watch Netflix. We do use the Internet to communicate—mainly via social networks and chat platforms like Facebook. And ads? Yeah, the Internet runs on ads. But in every category that really matters, Yahoo has been eclipsed. As revolutionary as it once was, it’s unclear if we need Yahoo anymore.
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