Yahoo's Google predicament
A San Francisco Chronicle story on Yahoo's darling child, Google, born in Mountain View in 1998 and now all grown up (it answers 150 million search queries/day) and taking on Yahoo itself, which owns 10% of Google due to its initial partnership to use Google for its search (Google used to be prominently dispplayed on Yahoo as part of a $1.1M advertising deal Google had done with Yahoo).
So Yahoo is in a tight spot -- distancing itself from Google and maybe even outright exile of Google's would mean that Google may have a less successful IPO...well, maybe, which in turn would make Yahoo's 10% interest less valuable.
But keeping Google close to home (Yahoo paid Google $7.2M in 2001 for its search services) as it continues to take on (quite adeptly) all aspects of information online, may mean that Yahoo is not only losing customers to Google, the post-dotcom portal, but also helping it along.
Google is now the second-most-popular search engine in the United States after Microsoft's MSN with 37.4 million unique visitors in August, according to ComScore Media Metrix. Yahoo's search page was third with 36.6 million unique visitors.
...Google's rivals are aggressively trying to persuade Yahoo otherwise. Inktomi, AltaVista, Fast Search & Transfer and LookSmart have all been pitching their technology and would consider landing Yahoo a big prize.
...Complicating Yahoo's predicament is that it can't afford to drop Google completely, analysts said. Some users might become angry, they said, and go elsewhere instead.
"To a certain extent, Yahoo didn't want to bite off its nose to spite its face," said Jeff Fieler, an Internet industry analyst for Bear Stearns who has no financial ties to Yahoo.