Yahoo has been hacked...again. The security breach affecting more than a billion (with a "b") subscribers is the second reported in the past year for the Internet giant and appears to be yet another nail in the proverbial coffin for what many believe is a dying entity destined for the tech scrap heap. It's so bad, in fact, that Verizon may pull out of a $4 billion buyout of Yahoo.
And while you may be thinking, "Hell, $4 billion isn't bad!" keep in mind that just a few years ago, the company was valued at ten times that. Go back a few more years and it was more than 20 times that amount. So what happened?
First, on the data breach. Yahoo has struggled with security for some time. This latest hack actually occurred way back in 2013, but was only reported in November after forensics experts determined it had actually occurred. Hacks can be notoriously difficult to detect and take many months to sort out. The breach left exposed not only names, addresses and emails but potentially security questions and answers.
If you have a Yahoo account, you should immediately change your password and, if you use the same password or similar elsewhere, change those too.
But, setting aside cyber security for a moment, Yahoo is a remarkable story considering how huge it got and how far it has fallen.
In the halcyon days of the Internet, Yahoo was king. First a massive search index (think of it as the first online Yellow Pages), it eventually morphed into a massive email provider, news distribution service, chat network and more. Yahoo became the default home page for millions of users.
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The dotcom bust was tough on the company, however. It lost a ton of its value and began to look into alternatives, including mobile and buying tech startups. In 2008, Microsoft was poised to buy Yahoo for north of $40 billion. That was rejected by the company's then-CEO, citing Microsoft's undervaluation of the company. Given where Yahoo is today, that seems like a pretty idiotic decision.
Make no mistake, Yahoo still has a ton of valuable properties and $4 billion is nothing to sneeze at, but it continues to struggle with the same basic problem, namely where to direct its resources. Unlike Google, the company that destroyed Yahoo's search business, the company remains remarkably unfocused. Google runs everything through its platform and continues to build, while Yahoo has stagnated.
Currently, the most valuable property for Yahoo is Alibaba, a company most westerners have never heard of, but if I said, "Think of them as the Amazon of China," you'd understand why they want to hold onto it — in fact, Alibaba is not part of the reported sale to Verizon.
All giant companies make mistakes, particularly in the tech world, where innovation doesn't always equal success. Finding the sweet spot between cool new gadgetry or technology and the interests of a fickle consumer base is difficult. But with its dwindling role in the marketplace, Yahoo will need to turn things around soon or risk going the way of other failed ventures, like AOL and MySpace.