Also dominated by search and advertising, why are Yahoo and Google's fortunes very different?
Yahoo, which peaked in the Internet industry in early 2000, has the world's most trafficed website, with a market capitalisation of $125 billion. At the same time, a company called Google appeared as a search engine.
Today, Alphabet, Google's parent company, is the world's second-most valued company with a market capitalisation of $516bn, with a profit of $16.35bn last year. Yahoo, which lost $4.36 billion last year, was bought monday by U.S. telecoms giant Verizon for $4.8 billion.
There are many reasons for their very different fortunes, but at the heart of Google's success are a consistent management team and a determination to grow its online advertising business through technology. Yahoo, by contrast, has been led by six CEOs during this period, often focusing more on content than on technology itself, leading to ambiguous business models.
Unlike Google, Yahoo was not initially highly dependent on technology, but rather artificially accessed information. In 1994, Stanford graduates Yang Zhiyuan and David Filo manually indexed hundreds of websites on the then-thriving Internet. They hired dozens of employees to filter requests from major websites to decide which sites to eventually add to Yahoo's directory. Subsequently, the company added news, e-mail, chat rooms and other functions to further strengthen its position as a web portal.
Although they are Stanford graduates, Larry Page and Sergey Brin took a different approach when they started Google. They developed a complex algorithm called "reptile" to collect content. This fully automated model quickly overtook Yahoo's catalog, and as the Internet exploded, they were able to do it on a rapid scale.
In fact, Yahoo even hired Google in 2000 to provide search engine technology for it.
"Google has developed great automated search technology, and Yahoo is trying to continue to use manual methods to index the web." "By the time Yahoo tries to correct the situation, Google has established it as the number one search engine," said Danny Sullivan, founder of Search Engine Land, a search information site. "
Google's leadership team, two founders and then-CEO Eric Schmidt, a trained computer scientist, has always focused on search technology. The high-quality Google search engine attracts millions of users who disclose their needs and interests through the search engine. Google also sells ads in search results, boosts revenue through bidding, and encourages ads to boost prices and click-through rates.
Google's advertising business has become one of the most successful in modern business history, accounting for nearly 90 percent of Alphabet's $75 billion in revenue last year.
Yahoo saw Google's success and tried to correct its direction, so it started buying search and advertising technology companies and abandoned its partnership with Google in 2004 to build its own search business. But Yahoo has failed to gain a following from advertisers and is still pursuing revenue through its media strategy.
Marissa Mayer, Yahoo's current CEO and a former Google executive, has also made a number of attempts, including spending $20m on broadcast rights to NFL games, but has failed to stem the decline in revenue.
Page and Brin have long valued the technical capabilities of their employees, which has given the company seven products with more than 1 billion users, including Google Maps, Gmail and Android. Almost all of these channels have delivered users to Google's advertising business.
Larry Kim, of WordStream, an internet marketing company, recalls that Google's founder once asked him to come up with a complex algorithm during a 2001 hiring campaign. "It's a very complex computer science problem for an entry-level programmer position." "The DNA of this company comes from their founders," he said. "
Page, Brin and Schmidt still run Alphabet and control the majority of voting rights, helping Google maintain a consistent path. They say Alphabet was set up to look for the next big technology business.
But at the same time, analysts say Yahoo has had little to do with innovation since its peak.
Source: Sina Technology Dinghong
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