Yahoo has the potential to disrupt online search, says analyst Alex Cho

First published for a Paris-based media startup

Alex Cho pic

INTERVIEW : Alex Cho, technology expert and contributor to Seeking Alpha

SUMMARYYahoo and Microsoft have reached new terms on their partnership, adding a termination clause in its search deal.  Technology analyst Alex Cho argues that this will give Yahoo new momentum to disrupt the online search market.

After years of sitting on the sidelines and watching Google dictate the pace, Yahoo may finally be ready to compete.  Cho predicts that its new found freedom as a result of its termination clause with Microsoft that will allow them “to monetize around 49 pct of desk-top search” will justify the costs of building new in-house technologies “to create a different kind of search engine.”

Barrier to entry

But competing with Googe won’t be easy as Cho points out for two reasons.  Firstly, Google has marketing built in to its product, which means that its adjacent services are rated higher than those of its competitors.

“Just the sheer value that Google is able to derive from its services is so massive that it is not even feasible for a smaller company to act on the same scale,” says Cho.

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Secondly, the fact that online search was conceived as a free tool since its inception means “demand is maximized out at the zero dolar point.”

Leader turned follower, turned leader (perhaps)

In the late 1990s, Yahoo was the “gateway portal to every other website” and Google was just a reasearch project out of Stanford university.  Its dominant position led it to believe that it could buy out Google if it ever became a threat to its dominance.  At the time, Yahoo was championing the directory listing approach which was standard and it was only after Google moved towards the current search engine model that Yahoo realised that it would need to adapt or die.  It was at this point that Yahoo joined forces with Microsoft and Bing, but by then Google had earned its reputation as the market leader in online search.

In Cho’s view, Yahoo’s creatvity was stymied by its partnership with Microsoft in the early part of the millenium.  He thinks the possibility to develop in-house technologies will now be far greater as a direct result of the termination clause.

Look mum, no hands !

The first area where Yahoo will be able to comptete, says Cho, is mobile as that is where the “vast majority of ad dollars are going to be growing.”  However, mobile is not necessarily limited to online search on mobile phones but the potential that is afforded by the growing eco-system of the Internet of Things.  Connected devices will be a key area of growth and one Yahoo will need to exploit. Cho believes the future lies in a kind of “universal assistant” that talks – quite literally using voice recognition technology –  to a host of different applications and devices.

“The very meaning of search might change from just simply looking up information that’s out there on the web to looking for information that’s across all software applications that are installed on your device,” says Cho.

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Context is everything

Another area where Yahoo will have to funnel resources is contextualized search.  According to Cho, Yahoo is pulling together data on users to generate relevant search results.  It is an area where Google is already strong but Cho believes there may be scope to operate in a different way.

Search versus social

Although search engines are still a fundamental part of the experience of surfing the web, research has shown that they may have reached saturation point.  Cho explains that online search or “Googling” has become such an integral part of everyday life in the developed world that potential for growth is essentally pegged to birth and mortality rates.  The way people search is of course changing and the explosion of social networks over the past decade has meant people are using search engines less and social networks more to find out information about the world around them.


Cho believes that if Yahoo and other search engines are to remain relevant, they will need to adopt a disruptive approach that will take into consideration new technologies, such as voice recognition and the Internet of Things.  To succeed, they will have to accept and work alongside social networks by further developing contextualised search and extracting deep links, such as tweets, Instagram photos and status updates.

The future, says Cho, may reside in a kind of “universal assistant” that can communicate between applications and devices as we are beginning to see with cloud technology.


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