If Yahoo Cant Do It, Who Can?

By Scot Petersen  |  Posted 2001-03-19

In the post-World War II United States, one of the driving principles of capitalism, so to speak, was "Whats good for General Motors is good for America." Behind it was an implicit justification of whatever GM accomplished in the name of getting the country moving again. In the late 90s, the statement was amended by some to read "Whats good for Microsoft ..." for the same reason. It may or may not have been coincidental that the great Internet shakeout of 2000-01 had its genesis around April of last year, about the time the courts found Microsoft guilty of abusing its monopoly power.

Now we need to reconsider another company that has assumed a keystone role in the New Economy: Yahoo. A company that once seemed invincible is struggling along like your average dot-com: plunging stock prices, poor earnings, management shakeouts—and the latest numbers show that Yahoo now trails Microsoft as well as AOL in visitors.

Even more troubling, if you care about the future of the Internet economy, is how dependent other dot-coms and service providers are on the portal—Yahoo is like Microsoft in that it supports an industry built around it. So, if Yahoo tumbles, it will have a domino effect on several other companies.

None of this means Yahoo wont succeed, but it does show how vulnerable its business is with its reliance on advertising—a model that still has yet to prove itself on the Internet. And given what we have seen this year, we cant say for certain that anyone is safe.

So the question becomes, if Yahoo cant make it, who will? Interestingly, its another search site, Google—a company that provides auxiliary search services to Yahoos—that is one of the few hot commodities these days.

So, is whats good for Yahoo good for America? No, not if you would like to go back to the pre-Internet Dark Ages. But yes, if you wish to see real businesses begin to crawl out of the primordial slime and evolve into something more.

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