Yahoo Could Have Owned Social Networking

Get this. Yahoo owns tons of social networking sites. They own MyBlogLog, Flickr and Del.icio.us. They own Upcoming.org. They own Konfabulator, now known as Yahoo! Widgets which is not social networking but adds features for potential social networking applications. They own Jumpcut, the upstart video platform.

Yahoo partners with Zillow to provide estimates on real estate to Yahoo! Real Estate users. Single handedly, Yahoo dominates the fantasy sports market, a demographic that is fiercely loyal and extensive use type users.

To cap it off, Yahoo could have owned Facebook if it wasn’t for management dropping the ball. Given Facebook’s recent emergence, a $1B investment in Facebook would probably return to Yahoo 3-5 times over in the next 2 years in terms of Facebook valuation.

The problem with Yahoo, of course, is not Yahoo. Yahoo has certainly not helped itself. But as Elise Ackerman at the Merc points out, “…that Yahoo shouldn’t try to out-Google Google“.

Google is the king of search. It is the king of remnant advertising in terms of pure marketshare. It is the king of web-based productivity tools (Gmail, Documents & Spreadsheets, Calendar). Yahoo can’t compete on Google’s turf.

However, they can beef up their social networking and become the king of that niche. Web 2.0 is all about the mashup so Yahoo’s challenge is figuring out how to actually integrate all these social networks they own into a compelling product or group of products.

Incidentally, the buzz today is that Fox Interactive may be in talks with Yahoo to trade off MySpace for a 30% stake in Yahoo. There be dragons in those talks. Watch closely!

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