Yahoo case study: Yahoo was a pioneering corporation in the early days of the internet and contributed to the way we use the internet today. With a valuation over $100 billion, it was once one of the most valuable IT businesses in the world. Since then, it has evolved into a cautionary story of wasted chances, poor strategic decisions and missed possibilities to innovate.
Yahoo case study: Failed to capitalise on the demand of search engine and social media
This case study on Yahoo starts in the late 1990s, Yahoo made one of its earliest and biggest mistakes. Yahoo had the chance to purchase Google for just $1 million in 1998, but decided against it. Google was just starting off as a search engine at the time, but it swiftly became one of the most powerful forces on the internet. By the time Yahoo retried to buy Google, it was already too late. Google is now valued at over $1.2 trillion.
In 2002, one of the first social networks, Friendster, was available for purchase by Yahoo for approximately $30 million. It didn’t pursue it. Friendster eventually lost ground to more recent social media services like Facebook and Twitter.
When Yahoo was given the opportunity to purchase Facebook for $1.1 billion in 2006, it had another significant acquisition opportunity. Jerry Yang, the CEO of Yahoo at the time, rejected the offer because he thought the price was too expensive. Yahoo offered $800 million and the deal did not go through. Currently, Facebook is valued at over hundreds of times more than that sum.
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Impractical and out of touch in all aspects
The 2000s was the time when Yahoo was on a competition-killing spree. Almost all of its acquisitions fell flat on their face due to its research team did not pose enough competence. Due to this, Yahoo committed strategic errors in its main business as well as missed acquisition chances.
For instance, Yahoo had millions of subscribers and was one of the leading email service providers globally in the early 2000s. Its email platform, however, became obsolete and challenging to use as a result of its inability to keep up with time. Yahoo was left behind as rivals like Gmail and Outlook continued to develop.
By the end of 2007, the realisation that Yahoo was failing was written on walls. Microsoft approached Yahoo in 2008 with a $44.6 billion acquisition offer. Jerry Yang, the CEO of Yahoo, rejected it. Microsoft sought to collaborate with Yahoo in order to counter Google but Yahoo consistently declined the offer. The deal never materialised as Yahoo believed it was undervalued.
In 2013, Yahoo chose Marissa Mayer as CEO, a well-known executive from Google. After the failure of her tenure, Yahoo had to be sold to Verizon for less than $5 billion.
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