The recent firing of Yahoo’s CEO Carol Bartz has left the internet dinosaur rudderless and looking for a buyer, and there are rumours that they now might be tying up with that other internet dinosaur AOL. The deal may look promising on paper as the two companies can reduce their combined workforce whilst joining together for a bigger share of advertising impressions – but don’t be fooled by that, if they do sign a deal it will be that final nail in their joint coffin.
Yahoo has been struggling since they failed to buy Google before it became the search giant, and also failed to innovate in the social or communication spaces now controlled by Facebook and Twitter. They even turned down an acquisition offer by Microsoft that could have at least given them the financial muscle to compete. They still have one of the biggest websites on the internet, but much of that is legacy as the internet has moved on, and continues to do so – leaving them behind. They haven’t even managed to make successes of their own acquisitions over the years: Delicious – that early forerunner of the social web – was recently sold to AVOS after a lack of integration and innovation from Yahoo; and early photo-sharing front-runner Flickr has been left to rot without sufficient investment to compete with photo apps such as Instagram.
AOL is looking equally rudderless after lurching from business plan to business plan over the last decade or more, and their recent acquisition of the Huffington Post, under which they have tried to reorganise their content properties, has yet to show any signs of being profitable. They have tried focusing on advertising, focusing on professional blogging, and now on exploiting free writers. But nothing is filling that rapidly glaring gap in their bottom line as people start moving away from AOL as an ISP.
Neither company is in good health. No, each is desperate for something or someone to turn around their fortunes – and neither will offer the other such a promise. Neither nurtures creativity or innovation, and they continue to fall behind the rest of the internet that is changing more rapidly than ever, and the only way to rejoin the race is to change their respective corporate atmospheres onto a new path – neither of them currently has a map to that path, and combining them would just put two lost companies together. It might allay their nerves for a while as they spend the next two or three years cutting staff and expenses as they try to integrate, but that would be a distraction – they are both dying, and in reality a merger would likely hasten their demise.