Yahoo’s lack of initiative and management principle has definitely created another major wedge behind Google in an ever-evolving Internet advertising market. Yahoo’s most recent setback, like the recent YouTube scenario, illustrates its instability to seize an opportunity and close a deal efficiently. In fact, Yahoo was on the right track by buying YouTube, but the deal somehow fell through and Google jumped on the opportunity with a total buyout of 1.65 billion shares. Yahoo, on the other hand, was too concerned with price, terms, and other legal details. By contrast, Google, known for its ability to grasp new and upcoming technologies, bought YouTube even though they didn’t have all the legal details worked out in terms of copyright infringement.

Going back to the relationship between Yahoo and Google, we realize the historical rivalry between these two search engine giants. The co-founders of Yahoo and Google started their search engines at Stanford University when they were PhD students working on their first search engines. Two years after Yahoo, Google co-founders Larry Page and Sergey Brin began working on their first search engine and even asked Yahoo co-founder David Filo for advice. In fact, Google got the necessary exposure by providing its search algorithm to Yahoo, which was supposedly an extension of Yahoo’s own search tactics. However, Yahoo later replaced Google with its own technology and created a rift in what was initially a happy marriage. Google, at this point, had already established itself among World Wide Web surfers as a relevant and efficient search engine. The fact that Yahoo has taken so long to create its own search engine is another indication of its lack of initiative and efficiency in relation to an innovation.

By monitoring the corporate culture between the two companies, we noticed a noticeable difference in the way they behave as an Internet entity. Google, for one thing, is known for being creative in getting ideas from employees as part of their job. Yahoo, on the other hand, has a program called an “idea factory” that encourages staff to come up with creative ideas. Similarly, Google’s co-founders take an active role in the daily activities of their staff, but Yahoo is not as intimate in its role with the staff. Perhaps this difference is mainly due to the culture that its management implements. To illustrate, Yahoo CEO Terry Semel has a rigid and disciplined management approach that is commendable in terms of corporate culture at companies like Microsoft. Compared to the approach of Google technologist Eric Schmidt, however, he doesn’t allow his employees their own unstructured creative thinking.

Also, Yahoo’s management system is said to have many internal flaws as to what its priorities are. For example, two of your departments already had the idea of ​​allowing users to upload their own videos, but due to their internal disputes over who would handle that project, they lost ground in launching that innovation. Meanwhile, YouTube, a startup, had pitched that idea and it had started to take off. To make matters worse, many of your employees don’t seem to have faith in their own company. For example, Mike Murphy, a former Yahoo salesperson, moved to Facebook to take over as chief revenue officer. Similarly, the Yahoo treasurer jumped at the opportunity to become Yahoo’s treasurer YouTube CFO. In fact, according to Yosseff Squali, an analyst at Jefferies & Co, “many entrepreneurs would rather work for a high-growth technology company than what they see as a boring old Internet company.”

Furthermore, even the fundamental question of what Yahoo is supposed to be is not really evident among Internet users, let alone among Yahoo itself. For example, some would consider yahoo to be a content company, while others would consider it to be a service company. However, Google, in the grand scheme of things, is essentially about search technology. Also, the fact that Yahoo wants to compete on so many frontiers doesn’t help the company stay focused in one particular area. For example, they compete in news with CNN, in sports with ESPN, in email with Microsoft, in instant messaging with AOL, in social networking with MySpace, and finally, in search with Google.

In essence, if Yahoo wants to maintain its dominance position on the World Wide Web, then it really needs to come to terms with its failures by initiating new innovations and taking risks. They need to earn the public’s confidence that they are a serious competitor and that they are not losing control of their will to succeed. Yahoo needs to fix its fundamental flaws and once it’s assembled it can start moving into new frontiers like Google, which apparently seems to have its pieces intact.