Yahoo's acquisition of Flickr: strategic evaluation and outcomes

Acquisition

Merger Acquisition International Strategies

Merger, Acquisition, International Strategies

Merger, Acquisition, International Strategies

For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

Corporation

With around 12,000 employees, Yahoo is a multinational corporation that offers internet-based services. The company offers search engine, web portal, dictionary, email, advertising, groups, answers, video sharing and many more. The company has long series of acquisitions including Social news business Snip-it, blogging site Tumblr, Maktoob etc. one such acquisition was the purchase of Flickr. Flickr is a site for hosting images and videos. Hosting photos was a problem when Flickr was born. Not every site would let upload photos for free. People from anywhere in the world can easy access, make accounts and upload photos and videos on the site. The company was found in 2004 and acquired by Yahoo in 2005.

Acquisition

Yahoo one of biggest companies with multibillion annual income. It has been growing since it started in 1994. The company grows by offering different new services that are high in demand. For example, Yahoo answers and Yahoo dictionary are most desired among students. Even Google was very late in offering dictionary and translation services. Yahoo purchases business normally with three features:

The acquired business has very well defined target market and has high growth potential

The acquired business is in developmental stages

Less cultural and environmental adjustments are required in young businesses

The reason to acquire a growing rather than fully grown company are that firstly such businesses are affordable. Like Yahoo purchased Flickr just one year after it started working in just $35 million. The business is worth billions dollar today. Yahoo claims there are 51 million registered members of Flickr and nearly 80 million unique visitors. Flickr was hosting about 6 billion images in 2011. As the use of Flickr grows on mobiles, the registration is expected to have increased far more.

Flickr was just one-year-old when Yahoo acquired it hence not too many cultural adjustments were required. The company employees were settled at suitable places without requiring a lot of time spending on orientation.

Was the Acquisition a wise choice

Yahoo has been acquiring companies to grow. The company itself was offered to be purchased by Google but it rejected since Yahoo claimed Google has underestimated the value of Yahoo. The Yahoo's acquisition of Flicker focused on two things:

People working with Flickr

Phases of Acquisition

The Yahoo's acquisition of Ficker can be discussed in phases to analyze what went wrong and where (Biggs, 2012). The phases include from the choice of acquisition through the purchase to integrating functions of acquired business.

Choice of Flickr

Flickr like businesses are never a bad choice to be acquired. These businesses have high growth potential and can increase the revenues multifold. But the problem lies with business philosophy. The 'acquiring business', in this case Yahoo, should first fully understand the philosophy of the 'to be' acquired company, Flickr. Yahoo should have understood that acquiring Flickr does not only involve hiring their teams and running business operations but delivering the same value what is expected from Flickr (Sokullu, 2007). Hence, while making choice of Flickr, Yahoo ignored that it was world's leading digital photo sharing site that is characteristically different from Yahoo's competitor Facebook and other sites that offer photo sharing as sideshows. Yahoo decided to acquire Flickr and Flickr management was not that strong like Twitter's and Facebook's to resist buyout.

Integration

They say that integration most likely kills innovation. This happened with Flickr's integration by Yahoo. The co-founder of Flickr Caterina Fake says that Yahoo was initially a good fit. She worked with Flickr both before and after the acquisition and left in 2008. Yahoo proved to be a great steward initially and resisted successfully the purchase offer of Google. She says that after the initial integration it was felt that DNAs of the two did not match.

The focus of photo sharing changed from innovation to integrating with Yahoo. Team with an engineering background is assigned for the integration task; they explore the code dynamics of small product, Flickr here, (third party tool or off-the-shelf component) to merge them in the main product -- Yahoo in this case. CorpDev is the integration team on which the integration decisions reply upon (Biggs, 2012). Handling the upcoming data in the merged application demands high usuability and is valuable. Milestones set by the eCorpDev team shows the integration of current local data into the Yahoo database. At that point, Yahoo hasn't put any emphasis about the need of upcoming users which was basically the community that uploaded data and created the market value of Flickr. Later community complains about the Yahoo's approach of opting integration that it emphasis the way index was built instead of focusing on the indexing itself. It was indeed the visionary failure.

All of the attention is paid to the tagging and user data instead of offering new features to the community that added value to the demand of Flickr. Finally untenable cycle was created leading to the hampering of innovation. One of the Flicker team member in terms of activating the cause of flicker while integration with Yahoo says that the team spent a lot of meeting times to convey the versatility of flicker to the CorpDev team and to justify their decision. Unfortunately, crunching of service requirements and engineering practices was there Flickr get merged with the Yahoo and hit the ground there.

Hence, its integration instead of innovation on which the focus of the flicker team is forced upon.

Critical Analysis of the Acquisition:

Yahoo simply missed the opportunity of capitalizing the social potential of Flickr. Robust mobile web was there with Flickr in 2006 even before the shipment of iPhone. Symbian phone or even T68i Sony Ericsson supported the browsing for Flickr content. For getting the photo from the phone to the user account, one has to simply email it. In 2008, apps were launched which hit out the mobile Web from the main tent and made it a sideshow (Sokullu, 2007). Apps totally changed the way of interaction. Instead of taking image first from the camera, editing it, upload it on web and then to email or share the image with the social community, people need a single app to do it all for them.

Flicker team knows the demand of app and its need but unfortunately they couldn't reflect their understanding in the code. One of the former Flickr executive conveyed that Flicker can't built iOS app for itself or any such related mobile app for the purpose achievement, well equipped team is required which the plenty of knowledge what the app required to do. According to the insiders, it was found in the very early stages that the mission of the two services Flicker and Yahoo was not completing each other rather it was totally collided. If people found that team of Flicker are totally iced out, then they will not be wrong in their perception. Thus it was a top-down decision for flicker app.

Yahoo app launched in September, 2009 was a full disaster. Exact picture of the app is depicted by the users' experience of the app usage. Usability complains included comments related to painfully slow speed, terrible navigation, buggy functionalities, everything is slow and drastically slows done with excessive use, necessary and sufficient functionalities are lagging in the app like progressive uploader etc. Along with usability issues, functionality constraints were also there with Flickr app. It didn't allow for multiple upload. One has to follow the complete set of steps for every photo one by one instead of uploading them all at once.

This excessive time consumption is not the only drawback of flicker app, also the quality get disturbed by the photos' downscaling to fit in the dimension of 450 x 600, one can simply call it murder of the image. Browser dependency was also there, instead if logging in through the app, user need to get login through the safari browser. Additionally the EXIF data stripping was there from the uploaded photos.

After the app was launched, people thought it's more efficient to upload and share photo manually by emailing the photo instead of using this app, as this app plays like the mud pile in the wedding gown. People found the app, worst ever app they tried.

Worst of all is the login feature embed in the app, app didn't let you sign up with a Flickr account. And if there is a new user, he is directed to Yahoo for sign up instead of Flickr. Other web services like Instagram, Facebook and Twitter draw users in their own services. Redirection for new user to Yahoo instead of Flickr says that it was only for exiting users and not a fully functional recruitment tool (Sokullu, 2007).

Two symptoms that are social failure and Flickr's mobile are the root cause of the same problem. It was gobbling up of small companies (along with wasting the smaller companies mission and contributive community) that are done by Yahoo in the name of integrating Flickr with Yahoo. Thus the story of Flicker is nevertheless same as the story of Aol's purchase of Brizzly or Google buyout of Dodgeball. Now, Flickr is totally different than what it was 5 years back (Biggs, 2012). It's no more remaining socially appealing but an internet backwater indeed. Unfortunately, Flickr lost his contributors, community and admirers after getting merged with Yahoo.

For the corporation that operates internationally, briefly evaluate its international business-level strategy and international corporate-level strategy and make recommendations for improvement.

In the light above strategically details, wide range for the area of improvement is there for providing the best of Flickr by Yahoo team. Following are the quick suggestions to regain the initially defined purpose of Flickr.

1) Flickr community should be given the importance that was the required for the satisfactory user experience.

2) Mission statement of Flickr need to be reminded to regain its lost glory.

3) Regular upgradation in existing functionalities is required

4) Require to introduce advanced functionalities, to attract more users.