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By MIGUEL HELFT
Hinttech.com
Published: July 10, 2008
SAN FRANCISCO - Unable to beat Google in the Web search business on its own,
Yahoo is trying a new approach. Yahoo wants to enlist a small army of search start-ups as
allies in the hope that collectively they will be able to stop the Google juggernaut, whose
share of Web searches keeps growing.
To do so, on Thursday Yahoo is opening its search technology and powerful data centers
to other companies, allowing them to build new or customized search engines without having
to make the huge investments needed to develop a search service from scratch. Yahoo, in turn, will
sell ads on those new search engines; if some grab even small slivers of the search market, Yahoo
will share in their success.
Yahoo's future remains uncertain. Hoping to seize on growing shareholder
dissatisfaction, Carl C. Icahn, the activist investor, is trying to wrest
control of the company from Yahoo's board and management team. Microsoft might
renew its bid for Yahoo if Mr. Icahn succeeds. Yahoo executives said they had high hopes
for the new strategy, which they call Boss, or build your own search service.
Over the course of years, we want this to be much more than a blip, said Prabhakar Raghavan,
head of research and search strategy at Yahoo. Mr. Raghavan showed a pie chart in which a
hypothetical collective market share of the new search engine had grown to be comparable to
Yahoo�s own. He joked that the chart was a pie in the sky, and would not discuss actual
market share estimates or timelines. Yahoo had 20.6 percent of all searches in the United
States in May. Google's share was 61.8 percent, three times as large.
Analysts said Yahoo's strategy was clever but added that many elements of the plan,
like the terms of the business relationships between Yahoo and its partners, had yet to be defined.
This is being done as a public-facing move to show that Yahoo has an idea for how to get
traction in online search,� said Allen Weiner, an analyst at Gartner. The overall concept is
very sound. But it is way too early to determine what kind of impact it will have.
Mr. Weiner said it was unclear how many developers would embrace the idea of building new
search services on top of Yahoo's. As of now, two start-ups, Me.dium and Hakia, have signed
up to use Yahoo's search technology.
Me.dium offers a service in which users can see what Web sites their friends are visiting.
That allows the company to collect information about what sites have buzz; at any given time,
said Kimbal Musk, the company's chief executive. Me.dium will use that information to rearrange
and supplement Yahoo's search results, creating a service that captures the social zeitgeist;
of the Web, Mr. Musk said. A search for Barack Obama on Yahoo, for instance, returns a set
of news articles, followed by the candidate's official site and an entry from Wikipedia.
On Me.dium, whose search service is still in a test phase, the top results include the
candidate's official site, followed by a popular YouTube video of Senator Obama dancing on
The Ellen DeGeneres Show, followed by Obama-themed images for PC desktops.
We think that for a good percentage of searches, we�ll get people to where they want to
go a lot faster than regular search engines,� Mr. Musk said. He said it would have been
impossible for Me.dium to create a search service on its own.
Yahoo estimates that it would cost $300 million to build a search service from scratch.
Google has allowed Web sites to customize its search results, but not nearly to the
extent that Yahoo is doing with Boss.
Yahoo executives acknowledged that the new strategy, if successful, could cannibalize
Yahoo�s own search business. But they said that if a search start-up became popular, it
would probably take more users away from Google than from Yahoo, as Google has a far larger share of the market.
�We did a lot of analysis,� said Bill Michels, senior director for Yahoo�s open search platform.
We are comfortable with the risks associated with it.
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