June 20, 2005 7:55 AM PDT

Google vs. Yahoo: Clash of cultures

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portal like Yahoo that offers services like free Web e-mail, social networking, publishing tools, maps, shopping, news and video search, and now brand advertising sales.

"There's a constant focus on each other," said a former Yahoo employee who asked to remain anonymous. "We (would) know everything they're working on, they (would) know everything we're working on."

They're fighting over a bigger cut of the currently $8 billion global search advertising business, which is expected to be worth $22 billion in five years, according to Piper Jaffray. What's more, search ads are increasingly part of lucrative brand advertising campaigns. Worldwide online brand advertising is expected to grow 21 percent this year from $11.3 billion to $18.2 billion, according to Goldman Sachs.

Terry Semel
Terry Semel
CEO, Yahoo

So far, both companies are prospering. In the first three months of the year, Google reported revenue that doubled year over year to $1.26 billion with net income of $369.2 million, nearly six times more than in the comparable period in 2004. Yahoo's revenue during the same time rose 35 percent to $1.17 billion and net income doubled to $205 million. Yahoo's market capitalization is $51 billion; Google's is $76 billion.

But the approaches these two companies are using to go after the same advertising dollars are remarkably different, and are a reflection of the skills of their top executives.

Semel shakes up Yahoo
Semel arrived at Yahoo at perhaps the lowest point in its history, replacing popular chief executive Tim Koogle four years ago. He brought with him a reputation as a no-nonsense businessman with an eye for the big picture and a Rolodex filled with Hollywood contacts.

Jerry Yang
Jerry Yang
Co-founder, Yahoo

A year later, Semel brought in Dan Rosensweig as the company's chief operating officer. Rosensweig, a former executive at CNET Networks (the publisher of News.com), clamped down on spending and made individuals accountable for the profitability of their divisions.

That's not to say they didn't spend aggressively on acquisitions. From 2002 to 2003, Yahoo bought search engine Inktomi for $235 million, employment site HotJobs for $436 million, and commercial search pioneer Overture Services for $1.7 billion.

Yahoo has taken a less financially risky approach in the last year despite its growing profits. It's been systematically examining and buying upstarts in up-and-coming markets. An example is last week's acquisition of voice over Internet Protocol (VoIP) company DialPad. Others have included the photo-tagging site Flickr and e-mail company Oddpost. All the recent acquisitions were so small they didn't significantly impact earnings, so financial terms were not disclosed.

David Filo
David Filo
Co-founder, Yahoo

Yahoo, many analysts believe, is entering a new era as a media company rather than a tech innovator. It's been building a Hollywood headquarters and an entertainment team under newly hired Lloyd Braun, a former ABC executive. Sources say that Semel will spend more of his time there. In Hollywood, the company will be in a better position to strike partnerships, license content and create new original programming.

That's not to say Yahoo is ignoring its own technology, which proponents say gets the short shrift when compared with Google. When Yahoo acquired Overture, it also landed AltaVista, one of the oldest search engines on the Internet, along with Inktomi. Top-notch engineers came with the acquisitions. Yahoo also recently hired Ysama Fayyad, a rocket scientist from NASA's jet propulsion team, to head up its research labs.

"The technical skill that it takes to scale (products) for 400 million users is something Yahoo hasn't been given credit for in the past. It requires rocket science," said Yahoo spokeswoman Joanna Stevens.

Yang also spearheaded an effort to attract top engineering talent.

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12 comments

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Elmer Fudd
In my humble opinion, any major league company that lets people get search results in the "language" of "Elmer Fudd" or "Bork, bork bork" or "Pig latin" is doing something right!!!!Sure, it's stupid, sure, its a waste of time perhaps.....but it stays with the same wonderful thought processes that allowed Apple Computers to be created in a garage by a couple of dropouts, that named something we now know as "cookies", and that allowed a vice president to claim to be the "inventor of the internet". There HAS to be, somewhere in that corporate Google structure, a sense of humor that allows employees the creative environment to just CREATE !!! My money is on GOOGLE for sure....just for that if nothing else !!! Wouldnt it be wonderful if our other appliance manufacturers could adopt a sense of humor like that? How bout red ice cubes from your new Side-By-Side Refrigerator?
Posted by momule (17 comments )
Reply Link Flag
WW @ GOOG
It is the wild west at Google. Has been for awhile. It'll be interesting to see how much
longer they go encouraging staff creativity
at near any cost. We tend to concentrate on their long suits which are very long indeed;
I sense Yahoo close on their heels and
smelling very attractive blood in the water.
Posted by malabrm1 (36 comments )
Reply Link Flag
The Yahoo/Google solution !
Here is one solution to the problem.

<a class="jive-link-external" href="http://www.gahooyoogle.com/" target="_newWindow">http://www.gahooyoogle.com/</a>
Posted by (1 comment )
Reply Link Flag
Very cute, C.G.
Well it is. Nonetheless, I still sense blood in the water. There's just too much money chasing too few ad dollars. Whenever this has happnned
previously in modern culture, the strongest
prevail. And in the internet search business,
Lord knows, market cap does not mean the
"strongest."
Posted by malabrm1 (36 comments )
Link Flag
It is remarkable how their results are the same
It is really remarkable how the results of Google &#38; Yahoo are the same!
For example search for:
date
and 90% of results in 1st 3 pages are the same.
This is called choice!
This is really as much as choice as getting your news from NBC or CBS.
Which means NO choice at all.
All you had/have to do was to look at the coverage of BIG US media about Iraq war, same
lies about justification for invading that misreable conutry was delivered by all as if they were one monolitithical source, of course with 1% difference.
I mean if one lessoned to European (non UK) media was like getting a totally different news.
That is what we need: a different source of Search than the same lies out of this 2 other Big US companies called google &#38; yahoo.
The world does not need more CBS, NBC, CNN masquerading as alternative news (information) sources. The world needs real independent information sources.
Edited for SPAM
[Edited by: admin on Jun 21, 2005 11:22 AM]
Posted by Manfred Levy (24 comments )
Link Flag
Dont be brain washed by the Big Media
Dont be brain washed by the Big Media Hoax about google &#38; yahoo. That is as if they are the only search engines, or the best search engines or that Google is a rebel search engine, etc. etc.
Nothing could be further form truth.
Google &#38; Yahoo are owned by the same Wallstreet Silcion Valley VCs, after all same the same VCs
seat on the Board of both companies.
And up to a short while ago Yahoo search results were provided by Google.
To say that Google &#38; Yahoo are real competition, that they represent the real truth, is like saying that CNN and NBC and CBS, etc. are different. Maybe they are different on the 1% margin, but on the core they are all the same, they are about controlling what people think.

However there is a real different search engine, one that is totally not owned by same gang that owes Yahoo &#38; Google, and one that lets the People (that is us) to determine the final search results. And one that also gives its profit away for our benefit.

Edited for spam content.
[Edited by: admin on Jun 21, 2005 11:21 AM]
Posted by Manfred Levy (24 comments )
Reply Link Flag
I'm a Lycos fan, myself
That dog could sell me anything.
Posted by H A R L O (9 comments )
Link Flag
Spammer support is the key indicator.
To distinguish between the styles and directions
at Yahoo and Google, all you have to do is look
at each company's contribution to the spam crisis.

Yahoo Stores is the last great bargain for
"bullet-proof" (complaint-proof) spammer Web hosting
in North America. For fifty bucks a month you get a Web site with a shopping cart, and you can plug it
in spam quite a lot without any interference from Yahoo.

Google doesn't have that problem.

Yahoo is one of the most popular mailbox providers
for the Nigerian advance fee fraud gangs. Watch
your Nigeria spam for a week and notice how many of the president's widows have addresses @yahoo.com.
Sure, Yahoo cuts them off after a week or so, if they get enough complaints, but that's long after
the spammer has collected any responses he's going to get. They might as well leave them up.
Yahoo knows this. They *could* take them down
the same day and the spammers would use somebody else.
But that would cost money and Yahoo's not feeling
any heat about it.

Google doesn't have that problem. Have you *ever*
heard from a Nigerian president's widow with
an address @gmail.com? Even one?

Spammer support is a good overall indicator
of how competently managed an Internet company is.
The #1 spammer support company on the Spamhaus.org
list (MCI) just happens to be the perpetrator of the
biggest stock fraud in history. Enron and
Global Crossing were spammer support superstars
in their day. And where they went, SBC and
Verizon and Comcast are going next. Just watch.

Yahoo smells of rotting spam. Google doesn't.
Posted by clsgis (41 comments )
Reply Link Flag
I think Google is great and is clearly the most important player on the web right now. But I have has this sneaking suspicion that much of Googles leaderships comes from its brand and positioning and not from superior services. So I have resolved to get from my Google addiction and try the rest of the web, starting with the obvious choice, Yahoo.

It seems that yahoo tries harder. They try harder to open and inclusive , of course they have to try harder because they are number two, at least in the mind of web users when it comes to search, and which is the starting point for most everything on the web today.

http://www.marblehost.com/faq.php
Posted by WebHostingFAQ (1 comment )
Reply Link Flag
I saw this one too as an example of the comparison of the different sites. I dunno, I personally like the google results but the bing interface. This is the page I was talking about:
http://www.absolutjenius.com/search_compare.html
Posted by trac113 (1 comment )
Reply Link Flag
So its hard to choice between the too..Because they both as you said offer different things..But i have to say google is a bit simple with somethings..and Yahoo has a nicer news set up but
Posted by MoshpitQueen (1 comment )
Reply Link Flag
 

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