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Why did Yahoo fail?- The story you want to know

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Compare how many times a day do you take the name of ‘Google’ with your mouth? And how many times ‘Yahoo’? Most probably, the answer would be Google. Why not Yahoo? Why did Yahoo fail? What were the factors responsible for the downfall of Yahoo?

Do you know that Yahoo was also a brand like Google? If Yahoo was a brand like Google, then what happened that it now became a stranger?

Hello all, QuitOffer warmly welcomes you. Today we’ll understand the reasons behind Yahoo’s downfall ‘The story you want to know’.

So read every word to know clearly “why did Yahoo fail?”

Before proceeding further, let’s take a look at the emergence of Yahoo and Google.

So Yahoo was the web service provider launched by Jerry Yang and David Filo in January 1994.

Yahoo provided services like “Web portal, search engine Yahoo! Search, Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Finance, Yahoo! Groups, Yahoo! Answers, advertising, online mapping, video sharing, fantasy sports, etc.

Yahoo was at its peak position before 1998 as in September 1998 Google was launched by Larry Page and Sergey Brin. Google is an internet-related service provider. Services like a search engine, online advertising technologies, cloud computing, etc.

So we have taken a brief introduction about both the brands now its time to understand the reasons behind the fall of Yahoo after Google has launched.

Well, there are many reasons for Yahoo’s downfall but the failure of acquisitions is in the center. Reasons are:-

1. Unfair Acquisitions.

Yahoo invested money in acquiring companies that gave them opposite results from its expectations.
Acquisitions like:-
1. Broadcast.com
2. GeoCities
3. Overture Services, Inc.
4. Flickr
5. Right media
6. Tumblr

2. Yahoo missed many great opportunities.

Unfair acquisitions is the one reason of “Why did Yahoo fail?” But there were various moments made in front of Yahoo to expand its business but it refused. Many other businesses’ were eating the market share of Yahoo but Yahoo was not eager to handle its downfall.

In 1998 Larry Page and Sergey Brin offered their revolutionary search engine algorithm(PageRank technology) to Yahoo for the amount of $1 million(derisory amount in today’s time) but yahoo failed to gauge its biggest competitor and refused to the offer. And the rest is history.

3. Lack of real vision.

The lack of foresight among Yahoo executives is the main reason for its downfall.

Initially, Jerry Yang and David Filo propose a directory-based system of websites organized hierarchically. And that was the opposite of a search engine where the indexing algorithm used to organize the web pages.

Yahoo! Directory is a directory published by humans which represents a huge work.

Yahoo never thought of building its own search engine and that was the big mistake made by the Yahoo executives. Also, it denies acquiring PageRank technology.

Even the refusal for acquiring the Google was a very big mistake in just $3 billion in 2002 because the Yahoo’s executives consider the amount overvalued while they had acquired the GeoCities and Broadcast.com $3.6 billion and $5.7 billion respectively in 1999.

4. Appointment of wrong CEO.

In order to further its development and expansion, both Google and Yahoo decided to hire a new CEO.

Google hired Eric Schmidt who made a significant contribution to the development of the Java programming language at the Sun Microsystem. Eric was fully aware of the future technology and also proved it.

On the other side, Yahoo goes with Terry Semel as the CEO.

Who had a stronger background but was not much aware of the future internet world like Eric Schmidt.

The appointment of irrelevant CEO by Yahoo also enhanced the downfall of yahoo.

5. Mismanagement of Flickr and Tumblr.

Acquiring a company doesn’t mean that you have fixed the growth of your company but its management.

In 2005 Yahoo purchased Flickr. Before this acquisitions its executives were planning to turn the photo-sharing site into a social network. Yahoo didn’t pay any heed this side, however, and missed the social media boat.

In 2013 Yahoo purchased Tumblr a blogging site in $1.1 billion but failed to extract the desired profit. Thus, Yahoo’s mismanagement of acquisitions is also the major cause of its downfall.

6. Failing to buy Facebook.

In 2006 Yahoo attempted to buy Facebook at $1 billion.

But according to the reports the Facebook’s board of directors forced Mark Zuckerberg to accept an offer of $1.1 billion.

Again Yahoo considers this amount overvalued and missed this golden acquisition as the current valuation of Facebook is approx $140 billion.

7. Rejection of Microsoft’s proposal.

The rejection of Microsoft’s $44.6 billion by Yahoo also reflects the lack of foresightedness of Yahoo’s executives.

In 2008 Microsoft proposes $44.6 billion to Yahoo but Yahoo considers this amount unfair.


Winning rivalries doesn’t prove that the future will be yours. You have to keep yourself up-to-date to the current scenario to keep you ahead. Having a huge customer base doesn’t mean that they will always be connected to you but they are connected to you because you are offering them something different. If Yahoo had focused on its goal and understood it well, it would have become the king of the web world. But Google focused on these that’s won the race.

Read : Do you really know what it means to sell?

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DisclaimerThe above article is compiled from information available on public platforms. Quitoffer advises users to check on their behalf before making any decision. 

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