Yahoo's Journey: How a $125B Giant Lost Its Way (And What It Teaches Us)

In the mid-to-late 90s, Yahoo was not just a website. It was the internet for millions of people.

It started as a curated directory of websites and grew into a full portal: search, news, email, finance, sports, horoscope, chat rooms, you name it.

At the peak of the dot-com boom around 2000, Yahoo's market capitalisation was over $125 billion, making it one of the most valuable companies in the world.

If you wanted to go online, you typed "yahoo.com" first. That was the habit.

Then the world changed.

The Moment Search Moved On (And Yahoo Didn't)

One of the biggest turning points in Yahoo's story came from a tiny start-up called Google.

A few beats that now read like legend:

• In the late 90s, Google's founders offered to sell their search technology to Yahoo for about $1 million. Yahoo passed.
• By 2002, Yahoo realised Google was a problem and tried to buy it for $3 billion. Google wanted $5 billion. Yahoo walked away.

At the time, Yahoo was still the bigger player. But it treated search as one feature among many, not the core of its business. Google did the opposite: it focused relentlessly on search and search advertising.

That seemingly small strategic difference is a big part of why one company now dominates global search and the other does not.

The "Peanut Butter" Problem: Trying to Be Everything

Inside Yahoo, people could feel something was off.

In 2006, an internal memo leaked that became known as the "Peanut Butter Manifesto". It criticised Yahoo for spreading its resources "like peanut butter" across too many projects, with not enough focus or conviction in any one area.

Looking back, the memo reads like a diagnosis of what went wrong:

• Yahoo tried to be a portal, a search engine, a media company, an email provider, a social platform and more
• It made a series of big acquisitions but struggled to integrate them into a clear strategy

Some of the most famous examples: - GeoCities – an early social web / personal homepage platform - Flickr – one of the first vibrant photo-sharing communities, arguably an early Instagram - Tumblr – acquired for $1.1 billion in 2013 to "reach younger users" and compete in social media

Each of these assets had the potential to define a category. Under Yahoo, they never quite did.

The Microsoft Offer: A Crossroads Moment

In 2008, Microsoft made an unsolicited bid to buy Yahoo for around $44–47 billion. Yahoo's leadership rejected the offer, arguing that it undervalued the company.

In hindsight, this became one of the most striking points in the timeline:

• Peak dot-com era: Yahoo worth over $125 billion
• 2008: refuses a $44+ billion acquisition
• 2016: sells its core internet business for under $5 billion

Those numbers tell their own story.

Marissa Mayer, Mobile and the Race to Catch Up

In 2012, former Google executive Marissa Mayer became CEO and was widely seen as Yahoo's "last big bet" at a turnaround.

Her priorities included: - Making Yahoo "a place people visit daily" - Modernising the product experience - Pushing hard on mobile and acquisitions of smaller start-ups - Refreshing culture and brand

There were some visible improvements, particularly in design and mobile usage. But the underlying issues remained tough: - The ad business was under intense pressure from Google and Facebook - Yahoo's portfolio was still fragmented - Cultural challenges and execution problems undermined the turnaround

The Data Breaches That Damaged Trust (And Value)

Between 2013 and 2014, Yahoo experienced two massive data breaches that affected user accounts on a scale never seen before:

• A 2013 breach that ultimately impacted all 3 billion Yahoo accounts
• A 2014 breach impacting at least 500 million accounts

The problems were not just technical. Yahoo was criticised for the delay in disclosing these breaches and for weaknesses in its security practices.

When Verizon later negotiated its acquisition of Yahoo's core internet business, it used the breaches to cut the price by $350 million, reducing the deal from $4.83 billion to $4.48 billion.

Sold, Split and Renamed

In 2016–2017, Verizon acquired Yahoo's core internet operations (alongside AOL) and merged them into a new unit called Oath, later rebranded Verizon Media.

The remaining Yahoo holding company, which mainly contained valuable stakes in Alibaba and Yahoo Japan, was renamed Altaba and eventually liquidated.

In 2021, private equity firm Apollo Global Management bought Yahoo for about $5 billion.

The Twist: Yahoo Never Fully Went Away

Here is the part people sometimes forget: Yahoo is not dead. It just stopped being the homepage of the internet.

Under Apollo and CEO Jim Lanzone, Yahoo has been repositioning itself:

• It still has huge reach: around 3 billion monthly web visits across Yahoo's properties
• Yahoo remains strong in News, Finance and Sports
• The company is now leaning into AI, including the acquisition of Artifact, the AI-driven news app from Instagram's co-founders

It is not the cultural force it once was, but it is not a ghost either. It is a mature, reshaped media and tech company.

So What Actually Happened to Yahoo?

If you zoom out, Yahoo's story is not just about one or two bad decisions. It is a pattern:

• It underestimated search and missed the chance to own it
• It spread itself too thin across products and acquisitions
• It struggled to define a clear identity: portal, media company, platform, or something else
• It faced stronger, more focused competitors in search, social and mobile
• It was hit by massive data breaches right when it needed trust the most
• It eventually became more valuable for its parts than as a growth story

A Note from the Present

We often tell these stories with the benefit of hindsight. Yahoo's arc feels "obvious" now: the portal that lost to Google, the pioneer that faded.

But at each step, the decisions likely felt rational to the people in the room. Search did not seem as central as it now looks. Social did not yet look like the gravitational force it became.

In five years' time, we might look back at today's leaders and see similar blind spots: about AI, about infrastructure, about trust and data governance.

The uncomfortable truth is that no one thinks they are Yahoo while they are becoming Yahoo.

In your organisation, are you genuinely clear on what your core is – and are you protecting and compounding it – or are you quietly spreading yourself like peanut butter across too many bets?