Yahoo Gives Up on Search, Concentrates in Web 2.0

Yahoo! has announced that it is giving up on trying to be the Number One search engine, capitulating to Google. Chief Financial Officer Susan Decker told Bloomberg News, "It's not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share."

Yahoo! stock fell 13 percent yesterday, but is making its way back up, and I'm not selling my Yahoo! stock or giving up on Yahoo! as a company so fast. Yahoo has been concentrating on Web 2.0 services, recently buying the music playlist community WebJay, the bookmark sharing social community del.icio.us, and the photo-sharing site Flickr.

In fact, "Over 10 months, Yahoo has acquired at least five fledgling Internet companies, all pursuing a similar goal: to build communities of Internet users that interact with one another over the Web." according to Business Week's Ben Elgin.

As today's Wall St Journal points out, [subscription required] social communities are doubling their sign-ups every month. Even though tagging sites generate only 1 percent of Google's monthly traffic now, tagging is moving into the mainstream, and, at last, into mainstream media.

Clearly, Yahoo! is betting on the future of social search and folksonomy. And I think they're right. They blew the whole search area when they started charging $300 a year for inclusion in their search engine. They're paying the price for that exclusionary piggyness, but they're taking the opposite stance now and I think it's the right one. That's why I'm keeping my three shares of Yahoo!

What do you think?