[Editor's note: This article has been revised since original publication, as the author erred in the patent description and subsequent analysis. Apologies for any confusion this may have caused.]
Yahoo. (NASDAQ:YHOO) What is it about them? Why did they become a tech joke punchline? Is it the outdated exclamation point? Was it their failure to purchase Facebook (NASDAQ:FB)? The CEO's fake resume? Or their naiveté when Google (NASDAQ:GOOG) first came to town?
Yahoo is still a major website, ranked 4th in the world. And I do give them credit for remaking themselves into a global hub of news, blogs and entertainment. And if it's any consolation, the finance section is still eons ahead of Google's.
But as any Internet user knows, Yahoo would trade all of that for Google's search market share in a heartbeat. I reckon that Yahoo co-creator and former CEO Jerry Yang regrets not taking Google more seriously--and more specifically, focusing too much on pure revenue optimization, and not enough on search and optimal results. Although I do wonder why Yang takes so much flak for Yahoo's downfall when it was Terry Semel, a media guy, who was CEO from 2001 to 2007 - the years that Google rose to power.
Still, a top 5 website is nothing to scoff at, and with that steady 12% search market share, Yahoo CEO Marissa Meyer is certainly looking at other options, i.e. making a deal with another Internet/tech behemoth. Google isn't an option, as it is likely that the monopoly-wary US government will nix any deal with them due to their current 67% search market share, and I pointed out a possible Apple/Siri relationship here. The rumors of joining Facebook seem to have been disproven, and the bad blood between the two seems to have escalated. What we do know is that Meyer is unhappy with Bing's performance thus far, though extricating Yahoo from the 10-year contract it signed with Microsoft (NASDAQ:MSFT) seems to be tricky, but feasible.
So where does this lead Mayer and her troops? Perhaps harking back to the good ol' days, when Yahoo dominated search and only had to worry about AskJeeves.com?
A look at a quiet patent granted to Yahoo shows that its search department is far from giving up the search fight, and maybe, the ahead-of-their-time upstarts at Google should take notice.
On March 12, 2013, Yahoo! was granted a patent titled: Identifying reliable and authoritative sources of multimedia content, and the abstract is as follows:
Embodiments are directed towards identifying authoritative sources of multimedia content useable in rank ordering class-dependent search-query results of multimedia content. In one embodiment, a citation model is employed for measuring or otherwise determining a strength of an authority to a content source. In one embodiment, a directed graph is constructed over a network of sources based on a propensity of one source to "cite" content provided by another source. In one embodiment, a random walk may be conducted across the network of sources to arrive at authority scores for each source in the network. In another embodiment, a machine-learning algorithm may be used to arrive at authority scores. The authority scores may then be applied for ranking, for example, search-query results, and/or retrieval purposes.
The description then goes on to say: The present invention relates generally to Search Content Analysis and Indexing and, more particularly, but not exclusively to identifying a query class-dependent authoritative source of multimedia content for use in rank ordering search results.
Yahoo! is taking the initiative here and sharpening its search teeth on multimedia-- a field which Google might not have necessarily focused on. Further description in the patent shows the nature of Yahoo!'s intention:
The invention examines a source of the content, meaning a specific web site, a user, an IP address, or the like, that is providing the content. Then a characterization of how authoritative this source is may be performed and how likely it is to provide content that is determined to be frequently relevant, interesting, and/or otherwise reliably relevant to subsequent searches and/or other content retrieval activities. This characterization may be reflected in an authority score for the source, as described further below.
Of course, Google's prized search algorithm is unknown, and even the greatest SEO experts probably understand a little less than 10% of the algorithm.
Should Yahoo reenter the search market, they will be able to start with their current 12% share. I doubt that number would shrink right away simply because Yahoo would break away from Microsoft's Bing. In fact, with Yahoo's storied search history, and perhaps being the last remaining website titan that still maintains a vast web presence (unless you include AOL), people might be inclined to give Yahoo a fair shake, and be curious to see what they have to offer in the way of search results.
Patent aside, I do believe that Yahoo's current "portal infrastructure" gives way to an easier road to search. The difference between an upstart search engine such as DuckDuckGo versus Yahoo is billions of built in page views. Yahoo currently has a 20% reach (percentage of global internet users who visit Yahoo.com) which is a remarkable number to start with.
I think that Yahoo was rather abrupt in giving up on their search, and, seemingly lost to history, actually switched their search to Google over a decade ago, as explained in the bottom of this 13 year old press release.
With over $4 billion in cash and virtually no debt, Yahoo can afford to devote the requisite funds to search, to at least take a stab at Google, and at the very least, compete with Bing.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in YHOO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.