The fall of Internet giants

AOL, Myspace, Yahoo, these giants are now only the shadows of themselves.

AOL, an involuntary charity

Is there another Web company that has managed to lose so much money through mergers or acquisitions?
AOL is America On Line, but it is also sometimes described as Another Old Loser.

The CEO fires the artistic director during a speech. On August 9, 2013, while speaking to employees of Patch, a Entrerprise acquired by AOL, the CEO, Tim Armstrong, who did not appreciate the artistic director Abel Lenz makes a picture of him while he was speaking, incorporates an order of dismissal in the middle of his speech. This gives that:

If you think what’s going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave Patch today, and the reason is, and I’m going to be very specific about this, is Patch from an experience — Abel, put that camera down right now! Abel, you’re fired. Out! [A pause.]
If you guys think that AOL has not been committed to Patch, and won’t stay committed to Patch, you’re wrong.

AOL websites

Bebo is a social networking site similar to Facebook, intended rather for teenagers and very popular in Great Britain. Steve Case is the former CEO of AOL. He published this post on Twitter.
It is true that Bebo had lost 50% of its audience and those things are likely to continue in the same direction. Bebo was bought by AOL in 2008 for $ 850 million, then sold in 2010 for $ 10 million. Then in 2013, Michael and Xochi Birch, the founders, bought it for $ 1 million, calculate the benefit!
The site is closed in July 2013 pending a new version.

AOL bought the Netscape site for 4.2 billion dollars. It would collect 1 billion license fee. The browser was already open source and programmers forked it to make Mozilla and Firefox.
Netscape was one of the most visited sites on the Web, there is nothing left. The domain is now redirected to the site of AOL. Its patents were sold to Microsoft

AOL also closed these sites:

CompuServe. The leading provider of online services, acquired in 1998, became a division of AOL, has ceased all operations.
ICQ. Messaging. Purchased from Mirabilis in 1998 and sold to a Russian company in 2010.
Mailblocks. Was an email management service online. AOL has retained its filtering system and closed the site.
Xdrive. Online storage service, acquired in 2005, it closed its doors in 2009. Bought by AOL in 2010, sold to... itself (former About staff) in 2013. Closed in January 2015. was acquired on September 2010 for $65 million and is now redirected to
It was AOL which is owner of Dmoz, a directory that was one of the first Web sites and to which AOL however has never dedicated more than two or three employees, it is now closed.
Nullsoft, maker of Winamp and other software was sold in 2014.

AOL is still provider of connections and had a time 30 million registered members, there are now five million. Now AOL has largely turned into a media company. To do this it has acquired several sites of information. Engadget, news about technology. Joystiq, game console news. Huffington Post, site of news, founded in May 2005 by Arianna Huffington, bought US $ 315 million on February 2011. TechCrunch, the blog of Michael Arrington has been acquired on September 28, 2010 (for $30 millions).
Is owner of an online mapping service, MapQuest. Bought in 1999 it is competing with Google Maps and Microsoft and Yahoo services.

An explosive fusion!

In 2000, AOL had bought Time Warner for $ 164 billion (40 times more). In 2002 the two companies announced a joint annual loss of $ 99 billion and the market value of AOL rose from 226 to 20 billion dollars! The two companies separated in 2009. Finally, AOL is not worth much, just like we feel!

According to the New York Times in May 2009, the merger with Times Warner was one of the largest bankruptcies of all time in the field of mergers and acquisitions.
The two companies together worth $ 300 billion before the merger. After falling stocks they were worth only 40 and since the separation of the two entities (December 9, 2009) Times Warner AOL is 19.7 billion worth and AOL 2.4 billion (June 2010).

In 2015, Verizon announces that it acquires AOL for US$ 4.4 billion. This makes it the owner of Huffington Post, Engadget, TechCrunch... and Dmoz.

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MySpace, rise and decline

Myspace logo

The first major social network created before Facebook, allows users to open and custom a personal space where they can express their ideas through a blog, share pictures or videos, and create a network of friends on the Web.

MySpace was inspired by the Friendster site created in 2002 in California, and that since became a predominantly Asian site. The domain had been registered earlier to be a hosting site, and was reused in 2004 for the social site.
In 2005 the site had more visitors than Google.

In 2009, MySpace had 1000 employees, over 200 million accounts (but a lot unused), 2 million visitors per day. There is little left of it.

The rise

History of MySpace

In 2007, MySpace was thought invincible

The site was founded in August 2003 by Chris DeWolfe and Tom Anderson. His rise is rapid and in 2005 he became the fourth most visited website in the world. He inspired Facebook, created by 2004.

It owes its success against Friendstr thanks to the speed of loading pages (20 seconds on Friendstr) and the freedom to create profiles at his convenience, which was controlled on the second. MySpace surpassed Friendstr after 6 months.

In 2004, according to a book referenced in footnotes, Zuckenberg agreed to sell Facebook to Myspace for $ 75 million, but this amount was found excessive and the deal dit not conclude.

In July 2005, the company News Corp buys Intermix for 580 million dollars. Robert Murdoch, owner of News sought to invest in the Web, the company rising seemed a good opportunity, and he was not wrong. It allowed him to make great profits. But we'll see how to force to press the lemon, it eventually lead to a gradual decline of a success story.

In August 2006, an agreement was signed with Google, against 900 million dollars, both assigning advertising space and make it the search engine of the site. It uses user profiles to target advertising based on their tastes and habits, and maximizes revenue...
The Google executives arrive by helicopter at Pebble Beach to sign the agreement, and among the guests, there was Tony Blair. Other advertising companies including Yahoo! and Microsoft were caught short.

Within 15 months of the acquisition, revenues go from 1 to 50 million per month. Local sites were opened in several countries.

Widgets provided by third party companies to add functionalities made the fortune of them. Youtube has enjoyed success from 2005 with a widget for MySpace!

The decline

Opposition arose to the site for several reasons. Its owner, Murdoch, motivated primarily by advertising revenue is very controversial.
Is criticized too a false relational aspect for artists who seem aim by establishing a wide network but expect mostly advertising revenue.
The site signed in 2008 a trade agreement with music majors that will receive compensation even though most of the works put on-line come from small independent artists not connected with these firms.

In April 2008, Facebook has joined MySpace in unique visitors (according to Comscore) and since has grown steadily while MySpace is on the downslope.
In the U.S., MySpace abandons the first place to Facebook in May 2009.
Murdoch's gamble to achieve 1 billion in revenue in 2008 is not reached, and since they are constantly decreasing.
40% of staff were dismissed. Expected loss of 100 million dollars in 2009.
The founder DeWolfe left in 2009.

After being squeezed like a lemon by the Murdoch group for 6 years, MySpace has been sold to Specific Media in June 2011 for the amount of $35 million. The singer Justin Timberlake would have take shares, after having been actor in the movie The Social Network that tells the story of Facebook.

We can compare this loss (from 580 M $ to 35 M $) to what Facebook made when it was put on the stock market: $ 104 billion!

Causes of the decline

One of the qualities of the site was its ability to respond to requests from the community and add functions or modify the site based on new needs.
But the inclination of the new owner to maintain a large advertising area came thwart this ability. They have to remove pages that are unnecessary steps and as Facebook has done, use Ajax to simplify the interface.
Reducing the number of pages meant to reduce the advertising space. This was against the objectives.
Users could compare the weight of the site with the simplicity of competitors, and disgruntled began to massively desert MySpace.

MySpace has decided to finally use Ajax, but too late, and it is the same with all other improvements: added only months after the competition and seeing that they attract many users, but users are already gone!

MySpace hired a former head of Facebook, Owen Van Natta, hoping to reverse the trend. But the audience has steadily declined and is now reduced to a fraction of that of Twitter.

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Yahoo, from Gulliver to Lilliput

The term Yahoo comes from the name of creatures in Gulliver's Travels by Jonathan Swith. Is is also an acronym of "Yet Another Hierarchical Officious Oracle". Yahoo was originally a directory of websites. Then it became one of the first search engines, before the agreement with Microsoft that makes it give up this activity. The domain was created on January 18, 1995. The directory was previously a sub-directory at

In 2008 the site had 1.5 billion visits. In early 2009 was still the most visited site, but according to Alexa, it is now overtaken by Google, Facebook and Youtube.

July 16, 2012, Marissa Mayer, former head of research at Google, has become the new CEO of Yahoo It's a different culture that comes to the firm. She has clearly defined her project for Yahoo: Focus on the user, ensure that all services are pleasant to use and inspire people. The program is to reduce bureaucracy, improve the UI of software, expand international presence. Search will be more customizable and will be a greater source of income.

On 25 July 2016, Yahoo was bought by Verizon for $US 4.8 billion. This includes the search engine and sites like Tumblr but not the shares in Alibaba valued at $ 40 billion.

Marissa Mayer at Yahoo!

The search tool of the directory was turned into a search engine gradually. In the late 90s, the site became a portal.
The acquisition of RocketMail in March 97 allowed the firm to create Yahoo Mail.
In January 99 it acquires Geocities that was the third most visited site in the world, and so became a hosting company.
The mode of operation of Geocities was then changed that was close to a social network and that caused a mass exodus of users. Geocities (founded in 1994) was closed in 2009.

A takeover attempt by Microsoft in 2009 was aborted due to opposition from Jerry Yang. His replacement as CEO by Carol Bartz has facilitated an alliance between the two companies.

In July 2012, Marissa Mayer became CEO of the group and would inject a new spirit. She had left the direction of Google search - where she worked for 13 years - after the change of CEO in 2010. The idea of uncluttered page that has made Google's success was her idea, as well as the intuitive interface of Gmail. She has been hired by Google in 1999 as a programmer but her sense of design has influenced all company's products.

Yahoo sites : We promise not to screw it up...

Yahoo has four social sites with a very wide audience: Answers, Flickr, Tumblr and Mail.

On, users ask questions to be answered by other net surfers. Then the first choose among the responses that they deem the best answer, which is actually the main difference with a forum. The site also offers a dictionary.
It has a builtin search engine that can find a question already asked and redirects directly to the best answer.
The site has become very popular even if the quality of answers is far to the best. Google has tried to emulate the service without success and then imagined different services: Moderator and Tipjar.

The site for sharing pictures is cited in the famous document: Ajax, a new Approach to Web Applications for its ease of use (Feb. 2005).
It was created by a Canadian company, Ludicorp, in 2004 so that user can exchange messages about a online game from the company, with the ability to upload photos. It was bought in March 2005 by Yahoo
In 2008, videos have been added. The audience has been declining steadily since acquisition and it is dwarfed by competing images sharing sites. In 2012, its death was announced by Gizmodo. It was before the arrival of Marissa Meyer.
In 2013 the site was completely revamped with 1 terabyte of free storage for photos or videos with advertising or paid subscription for no advertising. It seems since to find a new growth. In 2014, it hosts 10 billion photos, and interest groups to get 50,000 new members per day.

The blogging and sharing platform was acquired for $ 1.1 billion (instead of Dailymotion) on May 20, 2013. As we all know well the history of Yahoo and the fate suffered by the sites it has acquired, particularly Geocities which was in fact comparable to Tumblr, Marissa Meyer has seen fit to reassure users:

I’m delighted to announce that we’ve reached an agreement to acquire Tumblr!  We promise not to screw it up.  We will operate Tumblr independently.

The animated gif on article referenced displays the message "Keep clam and carry on." It was a propaganda message designed by the English authorities when entering the war against Germany.
Tumblr was founded in 2006 to provide a platform of "tumblelogging" or microblogging, which consists of short texts, images or other contents to share and distribute. This does not prevent from writing long articles or the blog to have its own domain name.
Upon the purchase, the site has 105 million blogs.
A petition was launched for users to protest against the acquisition which has collected 168,000 signatures on the 20 May, which is low compared to the 10 million visitors a day.

Other sites

Yahoo has been developed also through many acquisitions:

As of 8 February 2014, Yahoo led by Marissa Mayer acquired 38 startups. 31 have ceased their activities. The virtual assistant Donna was closed one month after its acquisition. Vizify making infographics on Facebook content has also closed its doors. Sites that have not yet closed were acquired in the last two months. The services of these startups can be integrated with other Yahoo sites or be totally abandoned.

Missed opportunities for Yahoo

The company had in its portfolio sites now abandoned that already were built from concepts that others took advantage.

This site bought by Yahoo in 1999 for $3.6 billion, was combining social networking and hosting. He could have become something similar to Facebook. Instead the social aspect was removed and the site limited to hostings only will be closed in 2009.
That is the site which invented the principle of paid per click ads that have made the fortune of Google. It was bought by Yahoo in 2003.
The technology that Google has implemented in its search engine in 2010, Yahoo already possessed it in 2005 and has never used it.
Was bought for 5.7 billion in 1999 and was a music and video site Yahoo which divided into services and it dropped into disuse.
The first bookmark sharing site bought by Yahoo could have had the trafic of Twitter and Digg. It became popular under the name of After having bought it, Yahoo changed the domain name.
Users store favorites as on their browser pages to retain the URL and make the list public.
We can see the accounts and other users and so find interesting sites. The number of Internet users that have marked a page is displayed and is an indicator of popularity. In addition, pages that become quickly popular will go the home, which gives them a wide audience. It can happen even to old pages.
It never evoluted and in 2010, judging it not profitable, Yahoo sold it to the founders of Youtube.

Some companies have no vision of the future.

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