Wall Street gave Yahoo stock a big boost today — largely due to the stellar quarterly performance of China’s Alibaba, in which the Silicon Valley Internet giant has a big stake.
Also encouraging was a slight increase in core revenue after many quarters of decline, although a one percent rise pales in comparison to current industry averages and is downright depressing next to the hair-on-fire recent results at both Google and Facebook.
While a lot of the chatter about Yahoo’s latest financials seems focused on increasing display advertising sales — which went up two percent in Yahoo’s first quarter — sources inside the company say the big focus for truly turbocharging revenue will be an aggressive effort being led by CEO Marissa Mayer and Adam Cahan, its SVP of mobile and emerging products, around search.
And, according to sources, the lodestone of two internal projects aimed at building a viable mobile search engine and monetization platform is to convince Apple to make Yahoo the default search engine on its Safari browser on the iPhone and iPad.
Currently, Google is set as the default search on Apple’s mobile devices, but you can change it to either Yahoo or Microsoft’s Bing by adjusting certain device settings.
Mayer aims to change that. A number of Yahoo insiders I have talked to said her plan to pitch Apple on the idea as its marquee mobile search partner is far along. The company has prepared detailed decks, including images of what such a search product would look like, and hopes to present them to Apple execs.
That has not happened as yet officially and no deal is imminent — it’s just the big honking goal of the new Yahoo effort, said sources. Still, several said Mayer has already buttonholed a few Apple executives on the topic, including its powerful SVP of design, Jony Ive, who knows the former Google exec well.
“This is the aim of the whole effort here, to grab the pole position in iOS search,” said one person working on the effort. “It will take more than pretty pictures, though, to convince Apple to give up Google, given its focus on consumer experience being top-notch. But Marissa wants it very badly.”
Mayer has shown a willingness to take on Google already, with advanced efforts under way to create a rival to YouTube, focusing on more professional content rather than user-generated. The company has been signing up partners for the service, with enticements of revenue guarantees and more. Many video makers are unhappy with the deals they currently get from YouTube and Mayer is essentially rubbing salt in those wounds.
She’ll have the cash to do more soon, as Alibaba goes public later this year, yielding Yahoo billions since it has to sell almost half of its 24 percent stake.
Thus, being spent on bringing back search to Yahoo.
Apple has long had a good relationship with Yahoo, which Mayer hopes to further improve. Yahoo already is the default data source on the iPhone for the device’s stocks and weather apps, the latter of which is a very slick and attractive piece of technology.
But search is Mt. Everest by comparison, especially since Google does a very good job already, is well-liked by consumers and, perhaps most of all, pays Apple upward of a $1 billion a year in fees for the business it engenders.
The even bigger issue, according to those familiar with the plan, is that Yahoo still does not have adequate technology to mount such a serious effort, despite its many attempts to build such technology in the past.
Its most recent foray into the area was Axis, a mobile browser for iOS devices that debuted in mid-2012 under the leadership of former Yahoo exec Shashi Seth. At the time, I liked it, describing it thus:
“It’s a slick offering, which essentially eliminates the texty link-filled search page for one of pretty visual tiles and pull-downs and more. Think Pinterest of search and you have the general idea.”
Despite other decent reviews, there was little uptake for it, and Yahoo whacked it a year later.
But Mayer did not move off search, an area she knows well from her many years in charge of product development in that arena at Google. Her aim: To move Yahoo squarely into competition with both Google and Microsoft in an attempt to regain control over a key revenue stream.
She ordered up two under-the-radar initiatives — Fast Break and Curveball — to get the company back into algorithmic search as well as search advertising.
Sources said the plan is being done as part of a contemplation of how Yahoo can accelerate the end of — or actually end — its longterm search and advertising partnership with Microsoft.
But rather than focusing on the Web and keywords, which Yahoo is contractually bound to allow Microsoft to serve under a 10-year search and advertising partnership deal, Mayer is aiming all this toward mobile and contextual search.
As I have pointed out before, there is a big loophole here for Mayer, since it is not included in Yahoo’s agreement with Microsoft to provide search and search advertising technology.
Yahoo execs have not run from our scoop that they were doubling down in search again.
In a recent interview in Advertising Age, for example, Americas head Ned Brody played coy and loud-and-clear at the same time:
Ad Age: You’ve mentioned search a few times during this conversation. Re/code has reported that Yahoo is planning to bring back search technology in a big way. What’s the thinking?
Mr. Brody: Search is an amazing product, and search needs to continue to evolve for consumers and for advertisers. I think we’re committed to figuring that out.
Ad Age: Figuring that out but still in partnership with Microsoft? Or will we see Yahoo make a big independent play?
Mr. Brody: We are committed to figuring it out.
Interestingly, since last year, Bing has been powering Apple’s Siri voice control search on the iPhone and iPad.
Whether Mayer can build adequate mobile search technology to satisfy Apple’s exacting standards around user experience remains to be seen. Execs there like Eddy Cue, who is in charge of software and services, have noted that they will not remove Google as default until there is a comparable alternative. So far, they don’t seem to think there is.
But there is no question the company certainly has been trying to remove default Google apps and services from its devices over the years, including dumping maps and YouTube.
So why not search as well? While there is an existing contract that extends into next year between Apple and Google, said sources, it wouldn’t be unreasonable to assume that there’s a flexible renewal clause.
Or, more precisely, a non-renewal out.
The idea has certainly been kicked around for a while, most recently with some positing that Apple would eventually replace Google search with Bing. In a piece titled “The Google-Free iPhone”, my BFF M.G. Siegler pointed out the obvious:
“Apple is directly responsible for billions of dollars being sent Google’s way via search on its devices. This will only continue to increase. It’s believed that Google makes more money off of iOS devices through search than they do through Android devices. In other words, Apple is indirectly subsidizing a portion of the major war against itself. Yep.”
Yep. That thought has clearly occurred to Mayer.
Google and Apple reps declined to comment and I am awaiting comment from Yahoo.
Join the conversation: