Yahoo was established byJerry Yang andDavid Filo in January 1994 and was one of the pioneers of the early Internet era in the 1990s.[6] However, its use declined in the 2010s as some of its services were discontinued, and it lost market share toFacebook andGoogle.[7][8]
Etymology
The word "yahoo" is abackronym for "Yet Another Hierarchically Organized Oracle"[9] or "Yet Another Hierarchical Officious Oracle".[10] The term "hierarchical" described how the Yahoo database was arranged in layers of subcategories. The term "oracle" was intended to mean "source of truth and wisdom", and the term "officious", rather than being related to the word's normal meaning, described the many office workers who would use the Yahoo database while surfing from work.[11] However, founders Filo and Yang insist they mainly selected the name because they liked the slang definition of a "yahoo" (used by college students in David Filo's native Louisiana in the late 1980s and early 1990s to refer to an unsophisticated, rural Southerner): "rude, unsophisticated, uncouth."[12] This meaning derives from theYahoo race of fictional beings fromGulliver's Travels.
Jerry Yang andDavid Filo, the founders of YahooThe Yahoo home page in 1994, when it was a directory. Asearch engine was added in 1995.
In January 1994,Jerry Yang andDavid Filo were electrical engineering graduate students atStanford University, when they created a website named "Jerry and David's guide to the World Wide Web".[13][14][15][16] The site was a human-editedweb directory, organized in a hierarchy, as opposed to a searchable index of pages. In March 1994, "Jerry and David's Guide to the World Wide Web" was renamed "Yahoo!" and became known as theYahoo Directory.[14][17][18][19][20] The "yahoo.com" domain was registered on January 18, 1995.[21]
Yahoo was incorporated on March 2, 1995. In 1995, asearch engine function, called Yahoo Search, was introduced. This allowed users to search Yahoo Directory.[22][23] Yahoo soon became the first popular online directory and search engine on theWorld Wide Web.[24]
Expansion
Map showing localized versions of Yahoo web portals, as of 2023Yahoo sign atTimes Square, 2010
Yahoo grew rapidly throughout the 1990s. Yahoo became apublic company via aninitial public offering in April 1996 and its stock price rose 600% within two years.[25] Like many search engines and web directories, Yahoo added a web portal, putting it in competition with services includingExcite,Lycos, andAmerica Online.[26] By 1998, Yahoo was the most popular starting point for web users,[27] and the human-edited Yahoo Directory the most popular search engine,[19] receiving 95 million page views per day, triple that of rival Excite.[25] It also made many high-profile acquisitions. Yahoo began offering freee-mail from October 1997 after the acquisition ofRocketMail, which was then renamed to Yahoo Mail.[28] In 1998, Yahoo replacedAltaVista as the crawler-based search engine underlying the Directory withInktomi.[29] Yahoo's two biggest acquisitions were made in 1999:Geocities for $3.6 billion[30] andBroadcast.com for $5.7 billion.[31]
Its stock price skyrocketed during thedot-com bubble, closing at an all-time high of $118.75/share on January 3, 2000. However, after the dot-com bubble burst, it reached a post-bubble low of $8.11 on September 26, 2001.[32]
Missed acquisitions of Google
Yahoo had two critical opportunities to acquireGoogle that it did not pursue. In 1998, Google's foundersLarry Page andSergey Brin approached Yahoo to sell their nascent search engine for $1 million, but Yahoo declined the offer.[33][34]
A more significant opportunity arose in 2002, when Yahoo's then-CEO,Terry Semel, entered into negotiations to purchase Google. Google was reportedly seeking a price of $5 billion. After weeks of negotiation, Yahoo's final offer was $3 billion, a figure that Google's leadership rejected, leading them to terminate the deal.[33] The failure to acquire Google in this second instance is widely considered one of the largest strategic errors in corporate history.[35]
Yahoo began usingGoogle for search in June 2000.[36][37] Over the next four years, it developed its own search technologies, which it began using in 2004 partly using technology from its $280 million acquisition of Inktomi in 2002.[38] In 2003, Yahoo acquiredOverture Services, Inc. (formerly GoTo.com) for $1.63 billion.[39] The deal was a strategic move to bolster its search advertising revenue in the face of growing competition from Google, as Overture was a pioneer inpay-per-click advertising.[40] In response to Google'sGmail, Yahoo began to offer unlimited email storage in 2007. In 2008, the company laid off hundreds of people as it struggled from competition.[41]
In February 2008,Microsoft made an unsolicited bid to acquire Yahoo for $44.6 billion.[42][43] Yahoo rejected the bid, claiming that it "substantially undervalues" the company and was not in the interest of its shareholders. Although Microsoft increased its bid to $47 billion, Yahoo insisted on another 10%+ increase to the offer and Microsoft cancelled the offer in May 2008.[44][45][46][47]
In July 2009, after months of negotiation, Yahoo and Microsoft finalized a 10-year agreement known as theYahoo and Microsoft Search Alliance.[50] Under the terms of the alliance, Yahoo's websites would utilize Microsoft'sBing for algorithmic search results, while Yahoo's sales team became the exclusive sales force for both companies' premium search advertisers.[51] The partnership required a complex migration of Yahoo's search technology and advertising platform to Microsoft's adCenter (later rebranded to Bing Ads), with the transition for advertisers and organic search results completed in October 2010.[52]
Carol Bartz, former CEO ofAutodesk, replaced Yang as CEO in January 2009.[53] In September 2011, she was fired by chairman Roy J. Bostock. The dismissal happened over the phone, a fact Bartz promptly communicated to employees in a widely publicized company-wide email.[54] CFO Tim Morse was named as Interim CEO of the company.[55][56]
Upon her arrival, Mayer implemented several significant cultural and strategic changes. One of her first major policy decisions in 2013 was to revoke the company's remote work option, requiring all employees to work from the office to foster a more collaborative culture.[58] She also initiated an aggressive acquisition strategy, purchasing over 50 startups, many of which were small, mobile-focused companies in an "acqui-hiring" approach to bring in new engineering talent.[59]
In June 2013, Yahoo acquiredblogging siteTumblr for $1.1 billion in cash.[60][61] While the acquisition was intended to attract a younger audience, it failed to meet revenue targets. In 2016, Yahoo wrote down $712 million of Tumblr's value, acknowledging the acquisition had not paid off.[62] Verizon later sold Tumblr in 2019 for a fraction of its purchase price.[63]
Mayer's efforts to revitalize company culture included a controversial quarterly performance review (QPR) system implemented in 2013. The system required managers to rank employees on a bell curve, with those at the bottom often being terminated.[64] The policy was unpopular with many employees and led to a 2016 lawsuit from a former manager who alleged the system was used to conduct illegal mass layoffs.[65][66]
Despite some positive metrics, such as a temporary increase in website traffic in 2013,[67] the turnaround effort stalled. By January 2014, doubts about Mayer's progress emerged when she fired her high-profile COO hire, Henrique de Castro.[68] By December 2015, Mayer was facing intense criticism as performance declined.[69] In February 2016, Mayer announced layoffs amounting to 15% of the Yahoo workforce.[70]
Sale to Verizon
On July 25, 2016,Verizon Communications announced the acquisition of Yahoo's core Internet business for $4.83 billion.[71][72] The deal, which excluded Yahoo's stakes inAlibaba Group andYahoo Japan, was delayed by the revelation of major data breaches.[73][74] On February 21, 2017, Verizon lowered its purchase price for Yahoo by $350 million and reached an agreement to share liabilities regarding the data breaches.[75][76] On June 13, 2017, Verizon completed the acquisition and Marissa Mayer resigned.[77][78]
Yahoo, AOL, andHuffPost were then combined under a new company, Oath Inc., later calledVerizon Media.[79][80] The parts of the original Yahoo! Inc. not purchased by Verizon were renamedAltaba and liquidated in 2020.[81]
Post-Verizon era
In September 2021,investment funds managed byApollo Global Management acquired 90% of Yahoo.[82] In November 2021, Yahoo announced that it was ending operations in mainland China due to the increasingly challenging business and legal environment.[83]
In February 2023, Yahoo announced plans to lay off 20% of its total workforce by the end of the year, impacting more than 1,600 employees, as part of a major restructuring of its ad tech division.[84] Following the acquisition by Apollo, CEOJim Lanzone initiated a strategy focused on a potential "turnaround", emphasizing the integration ofartificial intelligence across Yahoo's products.[85] This strategy included several key acquisitions, such as Commonstock in 2023 and the AI-driven news platform Artifact in 2024.[86][87]
On September 22, 2016, Yahoo disclosed adata breach that occurred in late 2014, in which information associated with at least 500 million user accounts,[88][89] one of the largest breaches reported to date.[90] The United States indicted four men, including two employees of Russia'sFederal Security Service (FSB), for their involvement in the hack.[91][92] On December 14, 2016, the company revealed that another separate data breach had occurred in 2014, with hackers obtaining sensitive account information, including security questions, to at least one billion accounts.[93] The company stated that hackers had utilized stolen internal software to forgeHTTP cookies.[94][95]
On October 3, 2017, the company stated that all 3 billion of its user accounts were affected by the August 2013 theft.[96][97][98][99][100]
Censorship of private emails affiliated with Occupy Wall Street protests
After some concerns overcensorship of private emails regarding a website affiliated withOccupy Wall Street protests were raised, Yahoo responded with an apology and explained it as an accident.[102][103][104]
Partners and sponsorships
The 2015Dublin LGBTQ Pride Festival, sponsored by Yahoo
On September 11, 2001, Yahoo announced its partnership withFIFA for the2002 FIFA World Cup and2006 FIFA World Cup tournaments. It was one of FIFA's 15 partners at the tournaments. The deal included co-branding the organization's websites.[105]
BuzzFeed acquiredHuffPost from Yahoo in November 2020, in a stock deal with Yahoo as a minority shareholder.[115][116] The NFL partnered with Yahoo in 2020, to introduce a new "Watch Together" function on the Yahoo Sports app for interactive co-viewing through a synchronized livestream of local and primetime NFL games.[117] ThePaley Center for Media collaborated withVerizon Media to exclusively stream programs on Yahoo platforms beginning in 2020.[118]
Yahoo became the main sponsor for thePramac Racing team and the first title sponsor for the 2021 ESport/MotoGP Championship season.[119] Yahoo, the official partner for the September 2021New York Fashion Week event also unveiled sponsorship for theRebecca Minkoff collection via aNFT space.[120] In September 2021, it was announced that Yahoo partnered withShopify, connecting the e-commerce merchants on Yahoo Finance, AOL and elsewhere.[121]
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