How Yahoo Is Killing Yahoo (and How the Media Is Assisting This Suicide)

News Analysis: When Yahoo hired new CEO Carol Bartz in January, I was convinced the company was on the turnaround path. I believed the Web services giant was capable of recovering from the mess of mutilated morale Yahoo co-founder Jerry Yang left in his wake following the end of his painful return as CEO.

Bartz put a serious visage on a company that no one was taking seriously anymore. Despite a robust display advertising business, Yahoo was suffering in many other areas, and Bartz looked right for the part of savior. But the more I watch the company's moves, the more I'm convinced it is slowly killing itself. The media, through its unflattering coverage, is assisting.

Yahoo has made many bids to draw positive attention in the last several months as it seeks to better compete versus Google, Microsoft, Facebook, Twitter and other Internet rivals. However, nearly everything it tries is shot down by the media, criticized for such things as being late to offer features for its Web services, or just flat-out wrong. The brightest example of the latter came when Yahoo announced that it had agreed to let Microsoft's Bing search engine serve as the back end for Yahoo Search.

Microsoft CEO Steve Ballmer and Bartz were convinced that they had a winning partnership, only to be humbled by financial analysts, who were turned off by the lack of an upfront payment to Yahoo. They didn't care that Microsoft would pay Yahoo 88 percent of the revenues per search query; they wanted Microsoft to pay Yahoo somewhere between $1 billion and several billions of dollars from the beginning.

Bartz fueled this fire by telling everyone a deal with Microsoft would take "boatloads of money." She again put her foot in her mouth by foolishly stating Yahoo has never been a search company.

Even when Yahoo thinks it is orchestrating a winning move on the leapfrog-happy Web services market, it finds its enthusiasm curbed by tepid reception to its plans.    

The greatest example of this came earlier this week when Yahoo Aug. 24 hosted a high-level demonstration of upgrades to its Yahoo Search, Yahoo Mail and Yahoo Messenger applications at its Sunnyvale, Calif., headquarters.

The "What Matters Most" event seemed like a great idea from Yahoo CMO Elisa Steele: Give the media a taste of its new product offerings and then sit back and let the praise wash over it for its ability to get up to Web 2.0 snuff with Internet rivals Google, Microsoft, Facebook and Twitter.

That didn't happen. When the Q&A session rolled around, roughly half of the questions from the media had to do with what would happen to Yahoo Search when Microsoft Bing begins powering it in 2010. Here's a sample of an answer to one of several variations of the what-happens-when-Bing-comes-to-town question: