Yahoo and Google

The New York Times writes:

The problems at Yahoo go beyond advertising. From video programming to social networking — areas of interest to users and advertisers alike — the company is losing its initiative. And each time a product fails in the market or is late, Yahoo loses some ability to do more deals and hire more talented employees.

Google, in the meantime, is taking advantage of Yahoos problems to cement crucial deals that could make its rivals recovery even more difficult. Before Google agreed to buy YouTube for $1.65 billion in stock, it paid $1 billion for 5 percent of AOL, locking in the right to sell text ads that appear next to its search results. And it agreed to pay $900 million over three and a half years to sell ads on, giving it a huge number of pages where it can place banner ads.

With these and other deals, Google has neutralized Yahoos big competitive advantage on Madison Avenue: its ability to sell the full range of advertising, from splashy video campaigns to text ads on search results.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.