I worked at Yahoo! when this was going on, I’m amazed the share holders didn’t sue Jerry Yang and the board for avoiding this sale. Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time. They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time.
Carol Bartz later came and told everyone it was pointless to be in the search business because Google were too big and impossible to compete with on investment. She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place. Pure Harvard Business School spreadsheet stuff.
It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.
If you are flabbergasted by the fact Yahoo, and everyone else for that matter, thought it absolutely impossible to disrupt Google (except for perhaps a handful of hubris-riddled people at MS), please remember the general sentiment HN used to have towards Google who according to us, at that time, could do no wrong. They were infallible. They were the brightest people in the world. They were The Good Guy (TM). They were so good that when they launched a browser later that year, no one blinked before installing it. You didn't blink. I didn't blink. We just drank the cool aid and clicked "install".
Chrome was an excellent browser when it launched... It might not be able to compete with such a wide gap against all the Chromium based clones out there now, but it was rightfully an amazing experience. Initially its only competition felt like Firefox
Well I'm not going to apologize for installing Chrome then or now lol. It was a fantastic piece of tech with the tab process isolation and V8 helped to revolutionize what "webapps" were capable of.
Sure, but if you had 20+% of the search engine market it seems terrible to not even try. Maybe it would have failed and bankrupted the company but I still think it would have been an exciting sell for the employees to try to compete. There were so many extremely talented people working there.
Tabbed browsing and incognito mode were incredibly innovative.
edit - Looks like Firefox introduced both. But Chrome was incredible in comparison at the time. I recall thinking Firefox was no longer worth it. I made the move back to Firefox a few years ago.
I also worked at Yahoo at that time, and I remember the feelings internally were more mixed. It was known that nearly all (or even more than 100%) of Yahoo's market value was the investment in Alibaba. Microsoft's offer basically valued all of Yahoo minus Alibaba and minus Yahoo Japan basically at nothing. And I'm perplexed by your blame on Jerry Yang, as out of the entire history of Yahoo, his Alibaba investment was the most financially successful act, worth more than anything any CEO at Yahoo had ever done combined.
Also remember at that time that Google, MSN, and Yahoo were the three major search engines at that time. It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. The Yahoo properties (combination of all their websites) was the most popular websites on the internet. They had a much stronger machine learning and data mining research lab, one year bragging that they swept all the best paper awards at the ML/DM computer science conferences.
> It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already.
Yahoo is still huge in Japan. According to the statistics I found, Google is #1 with 75% market share and Yahoo is #2 with 19%, but everybody I know around me uses Yahoo.
I'm with you on almost all of this, but can you explain why you think it's incorrect that Yahoo wouldn't have to spend a lot of money to keep up with Google?
Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. As well as company culture around innovation/continuous improvement, I suspect. All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. [1]
It seems to me that by 2008, there were fewer easy innovations lying around to make. Or if there were, Google was well prepared to match them. That, plus the way the size of the web had exploded [2] in the decade since Google's launch suggests to me that competing with Google would have been extremely expensive. The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008.
> Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale.
That's the myth, but it's pretty far from the reality. Long before Google became such a dominant player, competing search engines had matched or exceeded its quality, compute cost, and ability to scale.
> All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%.
Bingo. You nailed it. It turns out the search market was largely a distribution game. You wanted to be the search engine distributed to that massively growing audience, and Google did a great job of establishing itself as the first search engine presented to people.
> It seems to me that by 2008, there were fewer easy innovations lying around to make.
There's certainly been a lot of innovations in search since 2008, but nothing that was "disruptive". It's very hard to get more than a small percentage of people to change what search engine they use, and advertisers are not particularly interested in chasing that segment of the population.
> The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008.
Yeah, I really have to scratch my head at how people look at the empirical evidence and think that in 2008 it was a mistake to recognize the losing position competitors were in.
> It seems to me that by 2008, there were fewer easy innovations lying around to make. Or if there were, Google was well prepared to match them.
Except for privacy-centric search. This is what DuckDuckGo has capitalized on and it's worked out for them. Neither Microsoft with Bing nor Yahoo was able to see this as a niche to compete.
I never understood why Yahoo got so wrapped around the axle with the search engine business. I used to use Yahoo a lot to start my web browsing and I liked the fact that it wasn't a search engine. They provided broad categories that you could click on and you could keep drilling down to more specific categories until you found relevant websites. Not always the best way to search the web but it was great when you didn't know exactly what you are looking for. They could have easily continued to categorize and curate the web that way and provided a nice alternative to search engines, especially for non-power users. In addition to that Yahoo had so many successful components back in the day that had they spent even a modicum of money and development effort they would have continued to be a significant force on the web. Things like Yahoo Travel and Yahoo Groups still don't have a decent alternative these days. I still mourn the loss of some Yahoo Groups I used to participate in. Yahoo Finance was once one of the best places on the internet to research stocks and investments. Yahoo Mail was ahead of Gmail for many years and only through years of neglect finally let everyone else catch up, their lack of spam filtering was what finally killed my Yahoo mail account for me. Yahoo Briefcase could've been Dropbox or Google Drive 10 years before Dropbox existed. Heck Yahoo even had news aggregation years before Google did. Yahoo dominated fantasy football for many years. The fact that they couldn't grow and monetize any or all of these successful components was simply due to a complete lack of vision and leadership.
IIRC, Yahoo didn't have search tech until they bought Inktomi. They outsourced their search to Inktomi in the 90s, then to Google in 2000. It was only after Yahoo bought Inktomi that they brought it in house (can't remember timeline of switching off Google).
Even if you worked there, you may not have been aware of the fact that Yahoo already had an investment in a still small, but exponentially growing ecommerce startup in China, or that part of the reason the deal fell apart was because of a difference in opinion over how to value that asset.
I seem to remember the stake in Alibaba was worth a huge proportion of the valuation at the time. I didn’t know the deal fell apart because of that, I was just under the impression Yahoo’s board and Jerry didn’t want to sell to 2008 Microsoft.
Was there an understanding in 2008 that Yahoo... couldn't just "be Yahoo" going forward without falling behind / fading away and would have to really change dramaticly?
I ask because it seemed like there were attempts but they were sort of fits and starts and meanwhile most of Yahoo still seemed like just old Yahoo...
It does seem like a continuous failure in leadership at Yahoo to really change much at all. There were sort of psudo attempts to do other things (be a media company I guess) but they never came to much.
No, in 2008 Yahoo was already seen as a failed company.
The biggest mistake they did in the late 90's is to stop being a tech company and be a "media company" instead.
So in 2008 they were still big but mostly running on momentum they built during the 90's and a couple acquisitions. They had Yahoo!Mail that was popular, their homepage was still popular because some people forgot to try something different, Flickr that they bought and was the most successful photo sharing website until the got overtaken by general purpose social networks, and Yahoo!Japan that was hugely popular but was a joint venture with Softbank. Maybe some other stuff I'm forgetting... But they didn't have anything that made people dream.
Right before 2008 they tried to join the social bandwagon with a horizontal social network across their properties, but it failed just like when Google tried to do the same a couple of years later with Google+.
However, as much as Yahoo was seen as a failed company, Microsoft didn't get their Nadella rebirth yet. It was still an old evil outdated company, run by Balmer, mocking the iPhone and claiming their Windows CE phones with their tiny start button and stylus were better.
So Microsoft didn't look super sexy either. It really looked like 2 losers trying to band together to fight the cool winner that Google was.
The answer to the puzzle is that the rule about fiduciary duty really is only relevant to who the beneficiaries are of financial transactions; it pretty much does not have anything to say about regular business decisions. No doubt some shareholders contacted their lawyers and were gently dissuaded by a legal reality check.
Shareholders did sue, and the threat of the lawsuit meant the board had to devote a lot of energy towards the Microsoft acquisition offer, which was unfortunately why the offer was a win-win for Microsoft.
I agree it was stupid for Yahoo to not go to Microsoft at the time. Maybe Microsoft and Yahoo search and ads would be stronger today. Pushing against Google and FB more. But it doesn’t appear bad enough for a valid lawsuit considering Yahoo got more than $45B back since 2008.
Yahoo sold half of the Alibaba stake for $8B and $40B in 2012 and 2019. Yahoo Japan stake for $4B in 2019. And Yahoo itself for $4-5B around that time.
Of course the people who would have taken Microsoft stock would’ve made a lot if they held on through 2013, 2014. Microsoft stock was 10x less in 2008 and rose 50% before the end of 2014. The shareholders who would’ve taken cash wouldn’t have been better off without knowing how that cash would be used.
> She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place.
There's nothing inconsistent with the idea that a decade after Google established its extremely strong monopoly position in the search market, the barriers to entry, and the way to achieve success in the now established market are completely different than they were before Google achieved that monopoly and the market was as mature.
That might be true except everyone thought the results were the as good as Google if you rebranded Bing or Yahoo! SERPs with Google branding, layout and style. So might be worth thinking about how marketing affected Google’s success.
> Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time.
I'm not sure what you are referring to there. There was a lot of investment going on in search at the time. Certainly, critics (including me) felt it was maybe not the right investment, but "actively trying to destroy its own search business" doesn't ring true.
> They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time.
20% market share was unfortunately, a very weak position that was deteriorating pretty rapidly. The network effect ensured that the search business would continue to reward the dominant player dramatically more so than the smaller players, even if the smaller players had a technically superior product, which was what Bartz was getting at.
"She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place."
That's not ignoring how Google came into being, and the "money spent === great search engine results" isn't exactly what she said either. There's a reality that the business had evolved (not accidentally) to the point where barriers to entry were increasingly higher and more costly and the rewards disproportionately went to the dominant players. It is typical Harvard Business School stuff, because it's not at all an unusual circumstance in business.
> It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.
If you'll recall, they made the engine better; it didn't matter. Less than a quarter of the market would switch to another engine even if you gave them absolutely the worst results, and smaller differences in search quality impacted the behaviour of less than 10% of the market. Hell, there was still a ton of traffic going to Alta Vista despite that engine no longer being different from Yahoo's. Meanwhile the advertisers hugely favoured larger market share, and the consequently more efficient market yielded huge marginal rewards in terms of quality and profit. The search engine battle had largely already been lost by then; it was largely lost several years prior (arguably as far back as Google's AOL deal). The opportunity wasn't "wasted": they'd thrown pretty much everything at it, and come up short.
To this day, Google still has a dominant market share, despite a plethora of would be competitors. Sure, there is a possibility for a market disruption to change the game, but in a decade and a half, that has yet to emerge, so if you'd bet on game changing disruption in 2008 (and many investors did), from an investor's perspective, you'd have lost that bet.
Many commenters seem to be under the impression that Yahoo was later sold for a mere $5B to Verizon, but this is not the case.
MSFT's bid was for Yahoo including its stake in Alibaba, which had a far greater value than the parent company itself. The Verizon deal did NOT include the stake in Alibaba. This was spun off as a separate company Altaba under the ticker AABA. (edit: I should be more precise. This is why yahoo was spun off and sold. AABA is the remainder of the company, and retained the majority of the value. I heard previous plans to spin off the stake in Alibaba weren't workable due to issues around triggering a taxable event.)
AABA's spinoff accounts for the large value discrepancy. Poorly written news articles portrayed this as losing out on a great deal but this simply was not the case.
The years from 2006 to 2010 gave rise to today's BigTech.
Microsoft, Yahoo!, and Google were pioneers in the data-centers space. Amazon was only beginning to turn-up the heat. In retrospect, given the engineering talent and expertise at Y! at the time, it is a shame that in light of AWS' success they did not invest in Infrastructure-as-a-Service when their "web services" org was already churning out a range of tools and services on top of SOAP / REST. I mean, the Apache Hadoop ecosystem was mostly Yahoo!
As an outside observer, I think, with any luck, cloud computing could have saved Y!'s bacon, even as a late entrant (MSFT re-launched Azure in 2010). Y!'s focus on being a Media house now seems like a bad bet, which could have worked had they snapped Facebook for $1B.
Microsoft struggled with its initial "Red Dog" / "Windows Azure" release in 2008, too; so much so that parts of the company were EC2 customers back in the day.
I think this goes to show how stars had to align for AWS to stay a market leader as they started from a position of disadvantage (and needed a decade of exponential growth to consolidate only to contend with unrelenting competition from Azure), in face of companies that were are no slouches in terms of ability and product innovation, either. For Google though, around the same time Y! was floundering, their acquisitions and execution with Android, YouTube, and Chrome (I like to say Chrome was acquired because Google literally hired lead Firefox engineers to build it) ensured their relevance in the decade to come.
No wonder the folks who ran AWS, Azure, and Android/Chrome ended up as the eventual CEOs of their respective trillion-dollar mother-ships; whilst Y! has bitten the dust.
It's a huge missed opportunity, given the amount of datacenter capacity they had, not to mention standardizing on BSD. With BSD's concept of jails, virtualization was way easier - and this was a decade+ before Docker.
Maybe I remember it wrong but even in 2008 I felt that there was at that point some question of what ... Yahoo was / would be.
IIRC Yahoo at that point was a big name that wasn't irrelevant, but whatever they would be in the future seemed like it would have be be akin to creating new product(s) / company / sea change type move.
It was hard to imagine them becoming worth 66% more anytime near that time (even without hindsight).
Microsoft was try to buy market share in the search engine. This is when they were making a play for Bing to be a market contender in Search. We don’t know what would have happened if Bing had 20% market share out the gate, as well as access to Yahoo expertise/tech. A significant share of Search today would be worth significantly l more than $44B, and this deal would have been a fair gambit for Microsoft to make.
It was a very good offer, but it wasn’t enough for Yahoo to sell. Perhaps a larger offer would have helped, but I think Yahoo had an inflated opinion of their own worth.
It's amazing how much the internet has changed in just 13 years. Makes me wonder if the tech giants of today will become irrelevant by 2030s or we're past the point where the giants are rich enough to just buy up anything with potential while their original products fade into obscurity.
If anything it's more amazing how much it hasn't changed lately. The early days were a wild west full of market share battles and failed startups/ideas. Now the market appears mature with a few companies with strangleholds on it until perhaps a technological sea change catches them off guard.
If you look back a decade, things haven’t changed that much.
Facebook was public, growing, had figured out mobile and had already acquired Instagram. It was by far the top social media company.
Amazon had taken over online retail. It was already a behemoth. AWS was in its infancy, but it was growing.
Apple was already the most valuable company in the US.
Microsoft had been one of the top 10 most valuable companies for a decade.
Google was already a behemoth when it came to search. YouTube was massive and Android had just started gaining traction.
Out of the top five companies, Google is the only one that hasn’t been able to pivot or diversify. The rest of the companies have been able to learn from the mistakes of the previous generation.
In the case of Apple and Microsoft. They have both been around for 35+ years. Microsoft wrote the first version of the embedded AppleSoft Basic interpreter for Apple //e’s in 1980.
Google is well diversified. You even mentioned Youtube and Android. GCP isn't at the top but it's huge. Google docs/business suite is taking over, it's the goto for startups. They have a mobile carrier business. Self driving cars (although its dropping in valuation but they do have a large stake in Uber). Google is now Alphabet which it restructured into because of its diversification.
Small nit: FB wasnt public 10yrs ago but your point is valid either way.
Except for Amazon, that would still be extremely successful without AWS, the others had their original business model disrupted.
So far Google still have a stronghold on search, they've been able to secure it with Android and Chrome by controlling the devices, they seem to be doing fine.
That summer my girlfriend at the time and I were laughing at the different combinations of possible combined companies. Yahoogle was one. This one would have been Microhoo
Readit News
Carol Bartz later came and told everyone it was pointless to be in the search business because Google were too big and impossible to compete with on investment. She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place. Pure Harvard Business School spreadsheet stuff.
It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.
That's misrepresenting the search market's reality though. For most people, they never clicked install.
edit - Looks like Firefox introduced both. But Chrome was incredible in comparison at the time. I recall thinking Firefox was no longer worth it. I made the move back to Firefox a few years ago.
Also remember at that time that Google, MSN, and Yahoo were the three major search engines at that time. It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. The Yahoo properties (combination of all their websites) was the most popular websites on the internet. They had a much stronger machine learning and data mining research lab, one year bragging that they swept all the best paper awards at the ML/DM computer science conferences.
Yahoo is still huge in Japan. According to the statistics I found, Google is #1 with 75% market share and Yahoo is #2 with 19%, but everybody I know around me uses Yahoo.
Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. As well as company culture around innovation/continuous improvement, I suspect. All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. [1]
It seems to me that by 2008, there were fewer easy innovations lying around to make. Or if there were, Google was well prepared to match them. That, plus the way the size of the web had exploded [2] in the decade since Google's launch suggests to me that competing with Google would have been extremely expensive. The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008.
[1] See https://www.statista.com/statistics/185700/percentage-of-adu... and https://www.statista.com/statistics/214662/household-adoptio...
[2] From 1997 to 2008, there were more than 100x more websites, and I expect those websites got larger both in number of pages and per-page size. https://www.internetlivestats.com/total-number-of-websites/
That's the myth, but it's pretty far from the reality. Long before Google became such a dominant player, competing search engines had matched or exceeded its quality, compute cost, and ability to scale.
> All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%.
Bingo. You nailed it. It turns out the search market was largely a distribution game. You wanted to be the search engine distributed to that massively growing audience, and Google did a great job of establishing itself as the first search engine presented to people.
> It seems to me that by 2008, there were fewer easy innovations lying around to make.
There's certainly been a lot of innovations in search since 2008, but nothing that was "disruptive". It's very hard to get more than a small percentage of people to change what search engine they use, and advertisers are not particularly interested in chasing that segment of the population.
> The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008.
Yeah, I really have to scratch my head at how people look at the empirical evidence and think that in 2008 it was a mistake to recognize the losing position competitors were in.
Except for privacy-centric search. This is what DuckDuckGo has capitalized on and it's worked out for them. Neither Microsoft with Bing nor Yahoo was able to see this as a niche to compete.
Now fantasy is a big business and deeply tied to legalized sports gambling. That could have been worth hundreds of millions in revenue for Yahoo.
Hierarchical is exactly what you're describing and I remember using that a lot in the early days.
https://www.cnet.com/news/yahoo-to-acquire-inktomi/
Yahoo was also a major shareholder in Google because of those agreements/investments and cross-licensing Overture patents.
https://www.nytimes.com/2004/08/10/business/technology-googl...
I ask because it seemed like there were attempts but they were sort of fits and starts and meanwhile most of Yahoo still seemed like just old Yahoo...
It does seem like a continuous failure in leadership at Yahoo to really change much at all. There were sort of psudo attempts to do other things (be a media company I guess) but they never came to much.
The biggest mistake they did in the late 90's is to stop being a tech company and be a "media company" instead.
So in 2008 they were still big but mostly running on momentum they built during the 90's and a couple acquisitions. They had Yahoo!Mail that was popular, their homepage was still popular because some people forgot to try something different, Flickr that they bought and was the most successful photo sharing website until the got overtaken by general purpose social networks, and Yahoo!Japan that was hugely popular but was a joint venture with Softbank. Maybe some other stuff I'm forgetting... But they didn't have anything that made people dream.
Right before 2008 they tried to join the social bandwagon with a horizontal social network across their properties, but it failed just like when Google tried to do the same a couple of years later with Google+.
However, as much as Yahoo was seen as a failed company, Microsoft didn't get their Nadella rebirth yet. It was still an old evil outdated company, run by Balmer, mocking the iPhone and claiming their Windows CE phones with their tiny start button and stylus were better.
So Microsoft didn't look super sexy either. It really looked like 2 losers trying to band together to fight the cool winner that Google was.
Dead Comment
Yahoo sold half of the Alibaba stake for $8B and $40B in 2012 and 2019. Yahoo Japan stake for $4B in 2019. And Yahoo itself for $4-5B around that time.
Of course the people who would have taken Microsoft stock would’ve made a lot if they held on through 2013, 2014. Microsoft stock was 10x less in 2008 and rose 50% before the end of 2014. The shareholders who would’ve taken cash wouldn’t have been better off without knowing how that cash would be used.
There's nothing inconsistent with the idea that a decade after Google established its extremely strong monopoly position in the search market, the barriers to entry, and the way to achieve success in the now established market are completely different than they were before Google achieved that monopoly and the market was as mature.
As did I
> I'm amazed share holders didn't sure Jerry Yang and the board for avoiding the sale.
There was a lawsuit: https://www.seattletimes.com/business/yahoo-settles-lawsuits...
> Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time.
I'm not sure what you are referring to there. There was a lot of investment going on in search at the time. Certainly, critics (including me) felt it was maybe not the right investment, but "actively trying to destroy its own search business" doesn't ring true.
> They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time.
20% market share was unfortunately, a very weak position that was deteriorating pretty rapidly. The network effect ensured that the search business would continue to reward the dominant player dramatically more so than the smaller players, even if the smaller players had a technically superior product, which was what Bartz was getting at.
"She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place."
That's not ignoring how Google came into being, and the "money spent === great search engine results" isn't exactly what she said either. There's a reality that the business had evolved (not accidentally) to the point where barriers to entry were increasingly higher and more costly and the rewards disproportionately went to the dominant players. It is typical Harvard Business School stuff, because it's not at all an unusual circumstance in business.
> It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.
If you'll recall, they made the engine better; it didn't matter. Less than a quarter of the market would switch to another engine even if you gave them absolutely the worst results, and smaller differences in search quality impacted the behaviour of less than 10% of the market. Hell, there was still a ton of traffic going to Alta Vista despite that engine no longer being different from Yahoo's. Meanwhile the advertisers hugely favoured larger market share, and the consequently more efficient market yielded huge marginal rewards in terms of quality and profit. The search engine battle had largely already been lost by then; it was largely lost several years prior (arguably as far back as Google's AOL deal). The opportunity wasn't "wasted": they'd thrown pretty much everything at it, and come up short.
To this day, Google still has a dominant market share, despite a plethora of would be competitors. Sure, there is a possibility for a market disruption to change the game, but in a decade and a half, that has yet to emerge, so if you'd bet on game changing disruption in 2008 (and many investors did), from an investor's perspective, you'd have lost that bet.
I bought some Yahoo stock thinking Meyers was going to turn it around, but nope.
MSFT's bid was for Yahoo including its stake in Alibaba, which had a far greater value than the parent company itself. The Verizon deal did NOT include the stake in Alibaba. This was spun off as a separate company Altaba under the ticker AABA. (edit: I should be more precise. This is why yahoo was spun off and sold. AABA is the remainder of the company, and retained the majority of the value. I heard previous plans to spin off the stake in Alibaba weren't workable due to issues around triggering a taxable event.)
AABA's spinoff accounts for the large value discrepancy. Poorly written news articles portrayed this as losing out on a great deal but this simply was not the case.
https://www.marketcaphistory.com/aaba/
Microsoft, Yahoo!, and Google were pioneers in the data-centers space. Amazon was only beginning to turn-up the heat. In retrospect, given the engineering talent and expertise at Y! at the time, it is a shame that in light of AWS' success they did not invest in Infrastructure-as-a-Service when their "web services" org was already churning out a range of tools and services on top of SOAP / REST. I mean, the Apache Hadoop ecosystem was mostly Yahoo!
As an outside observer, I think, with any luck, cloud computing could have saved Y!'s bacon, even as a late entrant (MSFT re-launched Azure in 2010). Y!'s focus on being a Media house now seems like a bad bet, which could have worked had they snapped Facebook for $1B.
Microsoft struggled with its initial "Red Dog" / "Windows Azure" release in 2008, too; so much so that parts of the company were EC2 customers back in the day.
I think this goes to show how stars had to align for AWS to stay a market leader as they started from a position of disadvantage (and needed a decade of exponential growth to consolidate only to contend with unrelenting competition from Azure), in face of companies that were are no slouches in terms of ability and product innovation, either. For Google though, around the same time Y! was floundering, their acquisitions and execution with Android, YouTube, and Chrome (I like to say Chrome was acquired because Google literally hired lead Firefox engineers to build it) ensured their relevance in the decade to come.
No wonder the folks who ran AWS, Azure, and Android/Chrome ended up as the eventual CEOs of their respective trillion-dollar mother-ships; whilst Y! has bitten the dust.
MSFT could rely on a large enterprise-focused sales team with existing relationships with CIOs. Y! would not have had that luxury.
Microsoft eyeing Yahoo (buyout) deal! - https://news.ycombinator.com/item?id=19336 - May 2007 (25 comments)
Microsoft offers to buy Yahoo in $44.6 billion deal - https://news.ycombinator.com/item?id=107770 - Feb 2008 (3 comments)
Microsoft bids $44.6 billion for Yahoo - https://news.ycombinator.com/item?id=107771 - Feb 2008 (80 comments)
WOW. Microsoft Offers $44.6 Billion To Acquire Yahoo - https://news.ycombinator.com/item?id=107772 - Feb 2008 (2 comments)
Open-source silver lining in Microsoft's wedding vow to Yahoo? - https://news.ycombinator.com/item?id=107874 - Feb 2008 (4 comments)
Yahoo-Microsoft merger bad news for startups? - https://news.ycombinator.com/item?id=108099 - Feb 2008 (4 comments)
Source: Yahoo employees say "there is no way in hell that we are going to work for Microsoft." - https://news.ycombinator.com/item?id=108391 - Feb 2008 (6 comments)
Non-obvious winners and losers in Microsoft Yahoo Deal - https://news.ycombinator.com/item?id=108531 - Feb 2008 (1 comment)
Why Microsoft Acquiring Yahoo Could Suck For Everybody - https://news.ycombinator.com/item?id=108769 - Feb 2008 (7 comments)
Google's Chief Legal Officer on Microsoft's acquisition of Yahoo - https://news.ycombinator.com/item?id=108824 - Feb 2008 (5 comments)
Why Yahoo Should Say Yes To Microsoft - https://news.ycombinator.com/item?id=108873 - Feb 2008 (8 comments)
Google Offers to Help Yahoo Fight Off Microsoft - https://news.ycombinator.com/item?id=108949 - Feb 2008 (2 comments)
Google works to torpedo Microsoft bid for Yahoo - https://news.ycombinator.com/item?id=109346 - Feb 2008 (4 comments)
Silicon Valley after a Microsoft/Yahoo merger: a contrarian view - https://news.ycombinator.com/item?id=109612 - Feb 2008 (12 comments)
Redeye VC: Microsoft/Yahoo - let the exodus begin - https://news.ycombinator.com/item?id=110366 - Feb 2008 (8 comments)
Microsoft Adversary Rises Instinctively at Yahoo Bid - https://news.ycombinator.com/item?id=110392 - Feb 2008 (1 comment)
Microsoft Bid for Yahoo Drops To $29.50 a Share - https://news.ycombinator.com/item?id=110584 - Feb 2008 (1 comment)
My Opinion: Google wants Microsoft to buy Yahoo - https://news.ycombinator.com/item?id=112444 - Feb 2008 (3 comments)
Yahoo Board To Reject Microsoft Offer - https://news.ycombinator.com/item?id=112749 - Feb 2008 (44 comments)
Microsoft is 2000 times less effective than Google; Yahoo Board seems to be insane - https://news.ycombinator.com/item?id=112841 - Feb 2008 (17 comments)
Yahoo protects employees in case of Microsoft takeover - https://news.ycombinator.com/item?id=120372 - Feb 2008 (6 comments)
Yahoo sued for spurning Microsoft - https://news.ycombinator.com/item?id=122047 - Feb 2008 (19 comments)
Microsoft: Yahoo! has 3 weeks to decide - https://news.ycombinator.com/item?id=155833 - April 2008 (7 comments)
Yahoo tells Microsoft to increase $41B bid - https://news.ycombinator.com/item?id=156836 - April 2008 (10 comments)
The Yahoo!/Microsoft chess match continues: Yahoo! enters trial partnership with Google - https://news.ycombinator.com/item?id=159294 - April 2008 (6 comments)
Microsoft Said to Be Talking With News Corporation About Joint Yahoo Bid - https://news.ycombinator.com/item?id=159493 - April 2008 (3 comments)
Pmarca: If Microsoft goes fully hostile on Yahoo - https://news.ycombinator.com/item?id=175477 - April 2008 (27 comments)
Microsoft Says They’ll Pay More, increasing Yahoo! bid to as much as $33/share (from $31/share) - https://news.ycombinator.com/item?id=177816 - April 2008 (3 comments)
Microsoft Withdraws Yahoo Bid; Walks Away From Deal - https://news.ycombinator.com/item?id=180517 - May 2008 (58 comments)
Yahoo shares fall 19.7 pct as Microsoft withdraws $44B bid - https://news.ycombinator.com/item?id=181422 - May 2008 (5 comments)
How Yahoo Blew the Microsoft Deal: Part 1 - https://news.ycombinator.com/item?id=181885 - May 2008 (1 comment)
Battered Yahoo Admits It Overplayed Hand; Open To New Microsoft Talks - https://news.ycombinator.com/item?id=182085 - May 2008 (36 comments)
Why isn't anyone writing about Yahoo's amazing stock gains and Microsoft's plunge? - https://news.ycombinator.com/item?id=182259 - May 2008 (5 comments)
Yahoo, Microsoft Back At The Table - https://news.ycombinator.com/item?id=193615 - May 2008 (10 comments)
Microsoft, Yahoo, Google, and Facebook: War of the Worlds II - https://news.ycombinator.com/item?id=194101 - May 2008 (2 comments)
What Yahoo doesn’t want you to know about the Microsoft deal - https://news.ycombinator.com/item?id=208276 - June 2008 (2 comments)
Why Yahoo Passed On Microsoft's Search Deal (New Details!) - https://news.ycombinator.com/item?id=217178 - June 2008 (1 comment)
Microsoft Signals It Would Rather Talk To An Icahn-Controlled Yahoo - https://news.ycombinator.com/item?id=238583 - July 2008 (3 comments)
Yahoo spurns Microsoft again as blood boils - https://news.ycombinator.com/item?id=245059 - July 2008 (4 comments)
Yahoo tells Microsoft: 'Buy us' - https://news.ycombinator.com/item?id=355531 - Nov 2008 (19 comments)
Microsoft rules out Yahoo acquisition (again) - https://news.ycombinator.com/item?id=356526 - Nov 2008 (4 comments)
Why Microsoft Should Bid Again — and Yahoo Should Accept - https://news.ycombinator.com/item?id=369671 - Nov 2008 (1 comment)
Microsoft Poaches Yahoo's Top Search Engineer; "the end of Yahoo search." - https://news.ycombinator.com/item?id=369908 - Nov 2008 (21 comments)
Why Microsoft should forget about Yahoo and buy Palm - https://news.ycombinator.com/item?id=442003 - Jan 2009 (18 comments)
Microsoft-Yahoo Deal Struck, Will Be Announced Within Next 24 Hours - https://news.ycombinator.com/item?id=729152 - July 2009 (22 comments)
Microsoft and Yahoo Reach Agreement on Search - https://news.ycombinator.com/item?id=729823 - July 2009 (24 comments)
Microsoft looking to buy Yahoo again - https://news.ycombinator.com/item?id=3270790 - Nov 2011 (38 comments)
Yahoo Shares Top $31, The Price Microsoft Offered In 2008 - https://news.ycombinator.com/item?id=6414838 - Sept 2013 (49 comments)
IIRC Yahoo at that point was a big name that wasn't irrelevant, but whatever they would be in the future seemed like it would have be be akin to creating new product(s) / company / sea change type move.
It was hard to imagine them becoming worth 66% more anytime near that time (even without hindsight).
It was a very good offer, but it wasn’t enough for Yahoo to sell. Perhaps a larger offer would have helped, but I think Yahoo had an inflated opinion of their own worth.
It felt like a company that had success, and then never could find a way out of being old Yahoo while the world changed around them.
Facebook was public, growing, had figured out mobile and had already acquired Instagram. It was by far the top social media company.
Amazon had taken over online retail. It was already a behemoth. AWS was in its infancy, but it was growing.
Apple was already the most valuable company in the US.
Microsoft had been one of the top 10 most valuable companies for a decade.
Google was already a behemoth when it came to search. YouTube was massive and Android had just started gaining traction.
Out of the top five companies, Google is the only one that hasn’t been able to pivot or diversify. The rest of the companies have been able to learn from the mistakes of the previous generation.
In the case of Apple and Microsoft. They have both been around for 35+ years. Microsoft wrote the first version of the embedded AppleSoft Basic interpreter for Apple //e’s in 1980.
Small nit: FB wasnt public 10yrs ago but your point is valid either way.
So far Google still have a stronghold on search, they've been able to secure it with Android and Chrome by controlling the devices, they seem to be doing fine.
The combined company? NoPerfectSolutions
Microsoft CEMENT
44.6B would've been a great investment then