Yahoo was sold to Verizon for $4.83 billion in June 2016, but the former internet giant was once approached by Sergei Brin and Larry Page of Google to buy their fledgling search engine for a mere $1 million – an offer Yahoo walked away from.
These days Yahoo is a mere shadow of its former self on the internet landscape apart from its email alongside various other services, but by contrast, Google and parent company Alphabet have a market capitalization of nearly $500 billion.
Yahoo was once one of the companies that defined the very essence of the Internet. It was the embodiment of the Dot.com era when it had a market valuation that exceeded $100 billion. Yahoo was the king of search and mail in the 1990s, but a failure to adapt to the new changes that were afoot ultimately contributed to the company’s downfall.
Yahoo missed several key opportunities over the years to build on its previous success. One such opportunity came in 1998 when Page and Brin approached Yahoo with an offer to sell their PageRank algorithm for $1 million. At the time, the Google founders had just developed their new search engine, but rather than develop as a company, they instead wanted to focus on their studies at Stanford University. Yahoo refused the offer because it wanted to develop its own platform instead.
The PageRank algorithm still powers Google to this day. It was designed to rank websites in the order that they appear in Google search results and was the first time that the way a search engine measures the importance of websites had been codified.
Whilst PageRank helped internet users to find relevant third-party websites based on keyword searches, Yahoo did not want its users to leave their platform at all. Instead it had directories that were designed to provide answers to questions, it allowed people to view emails, to shop and play games on its platform as well – something that at the time had made them very successful.
This all in one approach had worked well throughout the 1990s but as the online world developed, Internet users began to demand specialised websites for each respective feature and Yahoo began to fall by the wayside.
In 2002, Brin and Page approached Yahoo for a second time when they wanted to raise funds for Google’s expansion. The reported $5 billion investment that Brin and Page requested would have resulted in Yahoo owning a substantial chunk of Google but the company again rejected the deal. Then Yahoo boss Terry Semel walked away from the offer as Yahoo looked to further develop its own search engine to ultimately compete with Google.
Whilst Yahoo once again failed in its execution, Brin and Page took Google to spectacular new levels of success.
After having once been by far the most popular website in the U.S., Yahoo slowly declined from the late noughties and in 2017, Verizon Communications acquired the majority of Yahoo’s Internet business excluding the company’s stakes in Alibaba Group and Yahoo! Japan which were transferred across to Yahoo’s successor company Altaba.
Some argue that Google would never have been worth even a tiny fraction of the amount it is worth today if Brin and Page had sold out to Yahoo the first time around, but that the Google founders would have ultimately have walked away from an immense fortune if the deal had gone through, rather than it being a case of a major blunder by Yahoo executives.
Whatever your take on the matter, spare a thought for our publisher Darcus White who once tried to buy some bitcoins on his credit card. The card was unfortunately declined because he was over his limit and those same bitcoins would be worth something in region of about £4 million today!