Open Yahoo! Will Play Nice with Google, Not Compete

By Josh Catone
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Much has been made today about Yahoo!’s Open Strategy, which Yahoo! describes as a way to leverage its 500 million unique users to encourage innovation across the web. Yahoo!’s strategy seems to be, the more we let people interact with the rest of the web from within Yahoo!, the more they’ll keep coming back to Yahoo!. That seems like a sound proposition — it worked for Google, after all, which built itself on the concept of sending people away to outside content as quickly as possible.

The open strategy is one that AOL is also now employing, as we wrote last week. Companies are starting to understand that the value of the web now lies in the free flow of information and data — the more open, the better.

Yahoo! demoed some of their new open platform to journalists yesterday, showing off third-party applications running inside its Yahoo! Mail service. And Yahoo! is hosting its annual hackday today at its Sunnyvale, California campus where developers build applications running on its platform. Yahoo! said that it will be rolling out more third party apps on Yahoo! over the coming months, and with recent projects like BOSS and Search Monkey, they’ve demonstrated that they’ll be opening up more to all comers as well.

Some are suggesting that Yahoo!’s Open Strategy is an attempt to take on Google. “There’s no guarantee that the release, a key step in what the company calls its Yahoo Open Strategy, will improve Yahoo’s financial misfortunes,” writes CNET’s Stephen Shankland. “But it holds promise a strategy that could help Yahoo without having to try to out-Google Google.”

But Yahoo! isn’t and shouldn’t be trying to take on Google. The Open Strategy actually plays quite nicely with Google. Yahoo! is not trying to create the web operating system the way that Google is — Yahoo! is trying to create the application platform for the Web OS (bearing in mind that “OS” as it applies to the web means something rather different than it traditionally means for computer operating systems). The Web OS race is really a three horse race, and Yahoo! isn’t among the contenders. But Yahoo! is at the forefront of a secondary race to provide a platform and tools for application providers to build on that OS. Google is in that race too, but Yahoo! is positioning itself to plug right into the web operating system — whoever creates it. They should really concern themselves with other platform providers, such as Facebook.

The Yahoo! platform is a plan for fixing Yahoo! that I suggested over a year ago. The ability to give developers access to a massive audience and rich social graph information is the number one driving force for a platform’s success (quality of tools is an important number two). There may not be anyone better suited to deliver in each of those areas than Yahoo!

There’s no reason that Yahoo! should be trying to compete with Google at this point — Google has already won. Their search advertising deal would appear to concede that point. But Yahoo! should be able to do quite well in Google’s shadow supplying a platform for the development of applications that run on Google’s Web OS (or Mozilla’s, or Microsoft’s, or whoever ends up winning).

And finally, Yahoo! reportedly has Girl Talk playing at hackday tonight, which gives them enough style points for a slight edge. But the race is just beginning.

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