Can A Million Niche Yahoo!s Beat Google?

By Josh Catone
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Remember the “Peanut Butter Manifesto?” That’s the name given to then-Yahoo! SVP Brad Garlinghouse’s November 2006 memo that called on Yahoo! to “boldly and definitively declare what we are and what we are not.” Concerned that the company had lost its “passion to win” and its focus, Garlinghouse pressed his fellow Yahoo! employees to reinvent the company with more vigor. Almost two years later Yahoo! is facing more trouble than ever.

Their search market share continues to slip, executives continue to flee the company, and their legendary lack of focus is still racking up page views but not much else. That Yahoo! needs to clean house is not in doubt, but that isn’t the only thing they need to do.

Last week, while I was thinking about penning a post on this topic, my thoughts kept coming back to an idea that I advanced last summer: Yahoo! needs to open up and turn themselves into a platform. Slowly but surely, that’s what they’re starting to do.

The Search Platform

Yahoo!’s platform approach can be broken down into two main categories right now: search and social networking. The first part of the search platform was announced in April at the Web 2.0 Expo in San Francisco, and opened a couple of weeks later. Called SearchMonkey, Yahoo!’s first step in “rewiring” all of Yahoo! involved opening up access to one of its most sacred bits: search results.

SearchMonkey allows third party developers a way to enhance search results with additional, contextual information. SearchMonkey is important for the the web at large because it incentivizes the use of Microformats and other bottom-up approaches to the Semantic Web — because structured data makes creating and launching SearchMonkey applications easier. However, it isn’t likely a game changer for Yahoo! in the search market. Like Microsoft’s cash back for search scheme, it doesn’t feel like enough of a differentiator to Google to make much of a dent in the search market.

Today, Yahoo! unveiled part two of their search platform strategy: BOSS, which stands for “Build your Own Search Service.” In simple terms, BOSS is an API that allows access to Yahoo!’s index. In other words, BOSS let’s vertical or niche search engine developers take Yahoo!’s results and apply their own ranking algorithms. This is a huge win for vertical search providers because one of the biggest costs and technical hurdles when setting up a new search engine is building and maintaining an index — that hurdle has just been removed.

Initial launch partners include Me.dium, Hakia, Cluuz, and Daylife.

The Social Platform

The second half of Yahoo!’s Open Strategy is the social platform. This is the one I focused on when I pushed out my suggestion for Yahoo! platform last summer. My version was built around their web-leading start page, MyYahoo!. Yahoo!’s began with the adoption of Google’s OpenSocial widget platform (Yahoo! is a founding member of the OpenSocial Foundation with Google and MySpace) and it continued last week with the release of MyYahoo! 2.0 to all users.

The new MyYahoo!, which will soon eventually support third party widgets via OpenSocial, is a major part of Yahoo!’s plan to “rewire” the company in terms of the social graph. Getting users to look at their start pages as a social hub is step one, stop two is to tap into the massive amount of nascent social graph data Yahoo! has via some of its web-leading fundamentals. (According to Yahoo! there are 10 billion aggregate relationships in Mail, Messenger, Address Book and other social services offered by the company that are just waiting to be exploited.)

Will It Work?

Though I’ve talked about Yahoo!’s Open Strategy platform in terms of two separate pieces, search and social, the two are really inextricably related. Yahoo!’s platform is supposed to be one big internal rewiring job that turns the whole place inside out and makes it more open and more social. That’s a radical move, but that type of move that Yahoo! really needed to make to stay afloat.

It’s certainly up in the air whether a gaggle of niche Yahoo!s based on BOSS can compete with Google. Then again, Yahoo! hasn’t revealed how monetization will work on BOSS-built properties, only that it will be allowed. If Yahoo! allows developers to monetize search results however they please, then more verticals could wind up being a win for Google anyway. And given the recent search advertising deal that the two struck, Google may wind up monetizing BOSS served search results in the future anyway.

However, clearly Yahoo! has been unable to compete with Google with its own ranking and display algorithms for search, so opening its index and letting others have a go is a smart move. If anyone touches on anything so revolutionary that users start to choose it over Google, Yahoo! will be in the best position to acquire whatever it is because it will already use their index and back end technology.

It also remains to be seen whether MyYahoo! can transition from its current “morning newspaper” feel to the social hub that Yahoo! so desperately wants it to be. MyYahoo! still leads all start pages with over 40 million users per month, but it is also well behind Facebook (and MySpace) as the center of most users’ social universe.

What do you think? Will Yahoo!’s Open Strategy pay off? Or is this just a last gasp attempt by a fading Internet giant to stay relevant? Let us know your thoughts in the comments.

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