Yahoo Open Strategy is not open enough

Yahoo has been looking for ways to differentiate itself from Google and online rivals like Facebook and MySpace. Until now, it has largely been reactive, losing search market share to Google, as well as community market share to Facebook and others.

Recently, however, Yahoo has settled on an approach that just might give it a fighting chance. The strategy involves opening up the Yahoo platform: open source, open APIs, open borders, and stringent privacy protection. CNET News' Stephen Shankland writes:

The Yahoo Open Strategy theoretically could help Yahoo not just keep up with the Joneses, but leapfrog them. Although Yahoo capitalized on the first generation of online social activity, e-mail, and instant messaging, it lagged rivals such as Facebook when it comes to letting people build online communities of friends and business contacts. Yahoo's new strategy, though, is tuned to its own assets.

Google has a powerful search engine, but its online community is nascent, compared to Yahoo's. Facebook and MySpace have got social ties, but not Yahoo's breadth of finance, sports, entertainment, news, and communications. Yahoo Open Strategy is a recipe not easily reproduced in full by Yahoo competitors.

What does "open" look like at Yahoo? You can check out to get a sense, but the reality is that screenshots don't really tell the full story on Yahoo Open Strategy because they show only Yahoo properties.

Therein lies the problem.

Yahoo Open Strategy, for all the ways it enables third-party services to find their way in, sounds just as closed as ever, when it comes to letting Yahoo services out. Yes, I know that part of the strategy is also about letting Yahoo services and data be consumed beyond Yahoo.com, but note the semantics in Yahoo's description of the strategy:

Based on our new universal-profile service, we let you see your connections' activity updates across Yahoo, such as the stories they've buzzed, the hotels they've reviewed on Yahoo Travel, or shows they've rated on Yahoo TV. In the future, those updates will come from things people are doing across the Web outside of Yahoo.

People today are communicating and connecting with others in various ways, from e-mail, to blogs, to real-time messages. The Updates feature brings these Web activities together in one place to allow you to stay up-to-speed on a range of your connections' activities and interests.

See what I mean? It's largely a one-way openness. Yes, Yahoo suggests that its applications and associated data may find their way into Google or Facebook, for example, but that's not what Yahoo Open Strategy really seems to be about.

Ash Patel, executive vice president of Yahoo's Audience Product Division, says the strategy is "changing Yahoo from a walled garden to the best of the Web," but the emphasis is heavily on bringing that Web inside of Yahoo, not pushing Yahoo services beyond the walls of Yahoo.com.

This may simply be a matter of semantics, but given Yahoo's second-place standing on the Web, I think its Open Strategy should have first focused on letting its services roam, rather than on corralling others' services to run within its walls. The reality is that Yahoo as a destination has been losing its appeal to end users.

Yahoo Open Strategy, then, to be most effective, should first focus on hooking users on its services, without hooking them on Yahoo. By emphasizing Yahoo first (plus third-party services within that domain), rather than third-party services first (with Yahoo services within those domains), Yahoo may not have done much to slow its slide.

[Daniel_Tunkelang]

Matt, nice article. Indeed, one-way "openness" seems to be a walled garden 2.0 strategy. Services want to make it easy for you to import information from all of your other services into theirs, but then be locked in. As far as I can tell, the problem is that no one has come up with a business model that plays well with true openness. A topic that is surely familiar in these parts. :-)

[joelaz]

I'm not a fan of Yahoo's latest strategy (or lack there of) but I'd argue that among the big internet companies, they are one of the most open in terms of sharing their content and services outside of the walled garden. Take a look at http://developer.yahoo.com and you'll see that they provide hundreds of API's that let third party sites power their site with Yahoo! content including Search, Maps, Mail, Music, Local, Shopping, Weather, Finance, Flickr, Delicious, and much more. Google, Facebook, and MySpace don't come close. Amazon is the only other big dotcom that shares more outside their network... and they do it because of the affiliate commissions.

[ecnerwallly]

Matt, I have to agree with joelaz. Please look at http://developer.yahoo.com/. Looking at what Yahoo provides, I am not convince of your intepretation of Yahoo's strategy as "largely a one-way openness".