Yahoo – On the Dark Side

There was a time that Darth Vader was one with the force, but alas, he went to the dark side. And there was a time that Yahoo was the brightest star in the Internet constellation. My browser favorites are chock full of Yahoo sites, including Yahoo Maps and Yahoo Yellow Pages. My home page is My Yahoo, and I save all of my contacts in the Yahoo address book so I can access them from both my PC and my cell phone. There may be better solutions out there, but in almost all cases Yahoo was the first. I can now relate to how conflicted Luke Skywalker felt when he realized his father was using his power for evil. In fact, in January 1997, Jerry Yang and I met at a Ziff Davis conference in Gstaad, Switzerland. Jerry was the keynote speaker. But that was then, and now is now. Just like Luke, I need to do what I need to do. Sorry, Darth… I mean, Jerry.

It all started innocently enough. Last September, Yahoo bought Overture Services, a search engine firm that provides companies with the ability to advertise based on the user’s search keywords. The rub was that Overture was deeply in bed with Gator/Claria. I, as well as others, thought this was a victory for the common users. Due to the effects of Gator/Claria, Yahoo was–and still is–losing revenue and customers in its search engine, content, and Yahoo Stores businesses. So Yahoo had every incentive in the world to dump Gator. Ending the relationship would help their business and would be the right thing for consumers. (Note that PC Pitstop research shows that 75 percent of Gator users are unaware that the software is running on their PC.)

How bad does Yahoo have Claria by the cajones? Claria’s recently filed S-1 statement (yes, Claria is actually considering an IPO), states that Overture/Yahoo represents $31 million of Claria’s 2003 revenue of $100 million. Guess how much money Claria made in 2003? Thirty million dollars.Yahoo is the entire difference on whether Claria is profitable or not. To take it a step further, Yahoo can single-handedly stop Claria from going public.

But Yahoo’s latest action truly startled me. Yahoo has now come out with a browser toolbar that helps users identify software that has been installed on their PC without their permission. But wait…the toolbar does not detect and clean Claria products unless the user specifically asks to detect “adware”. Why does Yahoo not detect and clean Claria products from the get-go, when every other detector does? By not detecting Claria, are they now endorsing its business model?

So Jerry, I’m calling you out. Remember me, from Gstaad? Given Yahoo’s investments in Gator/Claria, it looks hypocritical to develop a spyware/adware detector. If you really want to do something about this problem, just cut the cord with Claria. Don’t feed the beast with one hand, and swat a spaghetti noodle at it with the other. By now, you have to know that this ain’t strictly about money and earnings per share. Sometimes, it’s about doing the right thing.

Google has listed ten guiding philosophies for their company.
Please go read number 6 on that list. It says “You can make money without doing evil.” Think about it, Jerry, please. We’d love to have you back from the dark side.

Go with the Force,

Rob Cheng
CEO PC Pitstop LLC

Participate in the discussion on this article at the Pit.

Editor’s Note: Aug 2004: Yahoo recently announced that their toolbar would detect Gator. Good work everyone!

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