Webtribution.com

Nothing upsets me more than when a company tries to take advantage of their situation. As I mentioned in my SEO Domain Strategy 101 article, I own great deal of domains - in fact the exact number eludes me but I know it is around 1,800 or so. I have been buying, building and collecting domains since at least the mid-90’s and for a few years in the late 90’s I used Yahoo’s Domain service for most of my domain purchasing and hosting. Even though I have since moved all of my hosting away from Yahoo I still have about 150 domains that are housed and auto-renewed with Yahoo. Most of these domains I have never done anything with or have just held onto since I registered them for whatever reason. Every year I get my annual auto-renew letter, the price usually fluctuates, but it has always stayed in the $9.95 to $14.95 range. Whatever, no big deal since all my good domains are housed elsewhere and I have it on my list to transfer all of my domains to one company (not Yahoo).

Well imagine my surprise when I received the below email from Yahoo this morning. Yahoo is now charging $34.95 for domain renewals. Are you kidding me? $34.95? I am shocked when I see domain renewals costs over $10…$34.95 had me thinking it was an error. So, I proceed to call Yahoo and their helpful customer service staff confirmed the price change that went into effect July 1st. Wow. I am absolutely stunned by this. Anyone with any sort of domain knowledge will say that this is an absolute rip off by Yahoo and will result in a mass exodus of domains.

After digesting this for a few hours I started to think about what was Yahoo’s reasoning behind the price increase considering they are now nowhere near competitive. My first conclusion was that they wanted out of the domain business, so basically if  you don’t transfer your domain you would pay 3 - 4 times the going rate Fewer domains, higher profit margin. Hmm, doesn’t make much business sense since the new fee of $34.95 a year per domain would probably not cover all of the domains they ended up losing. My next thought was that they are trying to up sell me different services (like domain hosting and email), that when bundled together would decrease my overall renewal cost - for example, sign up for Yahoo’s $9.95 monthly web hosting and get your domain renewal free. This is a very common practice…however, when you look at the email below there is no mention of any other service. Housing a domain costs nothing except a $.20 yearly ICANN fee and a few bytes of space.

So what is the deal Yahoo? Did some moronic product manager slip this one by while Yahoo has been in chaos? If anyone has any idea as to Yahoo’s logic behind this ridiculous increase in domain renewal fee please share. In the mean time I will be busy transferring my remaining domains away from Yahoo.

When you are fighting for your life you need to do anything you can to save it. Yahoo executives, who are fighting for their jobs, are using their most valuable asset - the Yahoo.com Homepage - in their fight against Carl Icahn.

The Yahoo homepage, which is the most visited single page on the internet, is being used to let shareholders know the “truth” about Carl Icahn and convince the voters that his plans are wrong for the future of Yahoo. As you can see from the image at the bottom of this post, Yahoo didn’t just give the Icahn / Microsoft fight some meaningless real estate, we are talking big graphical call-outs on the right side and footer…space that is probably worth a very high CPM and garners millions of daily eyeballs. When you click on one of the two locations it takes you to a “Yahoo Stockholder Information” page that calls out Icahn and focuses on two big points: “The Icahn Slate Is Not the Right Answer for Yahoo!” and “Yahoo!’s Experienced Board and Executive Leadership Are Positioning Yahoo! for Future Success”. Basically, Yahoo points out the many flaws in Icahn’s plans and tries to discredit his business experience by calling out his not so good recent involvements with public companies.

So what exactly is Yahoo looking to get out of this? First they are trying to get every single Yahoo voting shareholder to side with the current executive team, there is even a convenient “vote now” button. Secondly, I am sure that Yahoo, who has been hammered recently in the press, could use any positive sway in public opinion. However, I would assume that any shareholder that cares to vote are well versed in what is been going on since every major media outlet online and offline has covered this Yahoo / Microsoft / Icahn battle in great detail from the beginning.

To me this reeks a bit of desperation, however it is understandable desperation. The fact that Yahoo has leveraged its homepage for their proxy fight shows that this battle very close - probably even more close than anyone expected.

In what was no shock to anyone, Twitter officially announced their purchase of search engine Summize for roughly a few million in cash and Twitter stock (hearing different numbers from different sources). Rumors of the purchase have been floating around the internet for over a week now and most people were just waiting for the official announcement. Today we saw what was once Summize.com now direct you to Twitter Search (Search.Twitter.com),which is the same Summize user-interface but with Twitter branding.

Summize was always the best Twitter search application around, I regularly used it to not only monitor specific keywords but my own name. Summize gained a great deal of traction and traffic when Twitter was having their technical issues the past couple of months. Twitter users flocked to Summize and other search services to make sure they caught all of their @replies and friends messages. I, like many others, never stopped using it once Twitter (sort of) got their act together.

On the surface the purchase of Summize drastically improves the internal search functionality of Twitter. But, as I have discussed in previous Twitter Monetization posts, this acquisition is another step in bringing in actual revenue. How? First, they can sell ads on the Twitter Search results pages. This is the easiest and most logical immediate step as everyone would be up in arms over any sort of advertisements within the main Twitter interface and Tweets. Secondly, Twitter can license out the Summize API to other micro-blogging / Web 2.0 services to power their own internal site-search, in this scenario they can either get paid for the use or have a rev-share deal in place.

The great thing about this deal is that it is a win-win for Twitter. They have improved the user-experience, brought in some top engineers and maybe created a much needed revenue model.

Now if only they can get rid of the “Fail Whale”…

Last night Yahoo announced the launch of another piece in their “open” puzzle by releasing Yahoo Search BOSS. BOSS, which stands for Build your Own Search Service, allows anyone to build and launch a custom search platform that is powered by Yahoo! search’s proprietary technology and infrastructure.

I played around with BOSS today and it is pretty cool, however it really isn’t that innovative considering both Microsoft and Google already offer their own custom search solutions. The difference with BOSS is that Yahoo really does give more control over the key part of any search engine - the rankings and results. Basically, Yahoo allows the user to manipulate the rankings however they see fit, this will really come in handy for more advanced users that are looking for their own unique search engine but do not have the resources to build it themselves.

Here is a list of features that are currently available with BOSS (Yahoo plans on rolling out more features over the next few months).

• Ability to re-rank and blend results.
• Presentation flexibility: no Yahoo display / branding requirements.
• BOSS Mashup Framework: allows developers to mashup search results with other public data sources.
• Access to web, news and image search.
• No rate limits on daily queries.

So why is Yahoo! launching BOSS? Two main reasons: 1) to grow their share of the search market and 2) create new revenue streams. I am not exactly sure how successful they will be with both but here is what Yahoo had to say about it…

“First, we believe that being open is core to Yahoo!’s future success — opening our network, opening our own search experience via SearchMonkey, and now opening our search infrastructure via BOSS — will lead to innovation both on Yahoo! and powered by Yahoo!. For BOSS, we see a virtuous circle in which partners deliver innovative search experiences, and as they grow their audiences and usage we have more data that can be used to improve our own Yahoo! Search experience and as a result, improve the quality of results our BOSS partners and their users get. Second, we do see new revenue streams from BOSS. In the coming months, we’ll be launching a monetization platform for BOSS that will enable Yahoo! to expand its ad network and enable BOSS partners to jointly participate in the compelling economics of search.”

Since I have used Google’s Custom Search Engine on numerous properties for some time now, the question becomes would I switch to BOSS? Not right away, but once Yahoo releases some other features and I see BOSS in action more, it is definitely something I will consider.

Is there a day that goes by where some new micro-blogging “Twitter Killer” isn’t launched? Jaiku, Pownce, Plurk, FriendFeed…the list goes on and on. Each comes out the gate promising to be the next big thing and outside of a few earlier adopters they usually fizzle into social media purgatory - some good user numbers but nothing to get that excited over.

The latest entry into the micro-blogging field is Identi.ca and the buzz around them is of course very loud. So what is the big deal? Well, first they copy the Twitter minimalist approach in terms of user-experience. They avoid cluttering the site with other features / content and stay away from displaying content in a new way (e.g. Plurk) - Identi.ca sticks to the basics. However, the key differentiation is that while other micro-blogging services are looking to capitalize on Twitters technical issues (Fail Whale anyone?) Identi.ca actually tries to solve it. Identi.ca has made its code open-sourced and encourages users to host Identi.ca on their own servers - this approach would distribute the load if the service became extremely popular and theoretically avoid the downtime that plagues Twitter.

So why wont Identi.ca, or any other micro-blogging service, take down Twitter? The answer is simple, long-term user adoption. There is a difference between just signing up & updating a few times and actually contributing on a regular basis. For micro-blogging the power is in the conversation and right now Twitter wins hands-down. During Twitters technical issues, where it seemed like it was down more than it was up, many people tried out other services, however the majority of users have always come back to Twitter in some capacity. It is true that some other services, like FriendFeed, have better features but if you look at the traffic (see graph below) Twitter has too big of a head start in terms of users and conversations. Any other micro-blogging service who launches is automacially put behing the 8-ball and must play serious catch-up and face, in my opinion, insurmountable odds.

Right now, FriendFeed is probably the biggest Twitter competitor in terms of functionality and industry buzz.  All of the big social media players are users and some (like Jason Calacanis) have become fans and have threatened to start migrating all of their conversations to FriendFeed and away from Twitter. However, the success of a micro-blogging service has to do more than just having Calacanis, Arrington, Scoble, Israel, etc, use it - I already read their blogs and subsribe to their feeds so really how is that providing new content discovery? It isnt.

On top of users and conversations, Twitter also has two other areas where they are killing the competition: their API and mobile strategy. Just about every Web 2.0 service offers their API’s - Twitter is no different. However, because of the volume of traffic Twitter generates, numerous third-party developers have built applications that truly enhance the Twitter experience - Summize, Twellow, TwitterVision, Twirl, the list goes on and on. Granted every other micro-blogging service can replicate each of these applications, but again it comes down to users and Twitter just blows everyone else away.  In regards to mobile, Twitter has gotten this right from day one. Micro-blogging is about sending quick updates and the ability to do that from your mobile phone via text message or applications (e.g. TwitterBerry) adds another layer of ease to the conversation.

At the end of the day micro-blogging comes down to two things - users and conversations, and you cant have one without the other. Twitter has both. Twitter does need to overcome its technical hurdles and there are definite improvements to be made to the user-interface but in the end Twitter is the only micro-blogging service that doesnt have to be perfect to succeed.

Anyone with even a basic understanding of search engines knows that Adobe’s animation platform Flash has always been a huge negative when it comes to Search Engine Optimization (SEO). Flash by nature combines all elements of an animation / content piece into one file (SWF) and whatever lives in that one file is not indexable by search engines. However, that has just changed as both Google and Yahoo have announced improved Flash indexing. How big is this for SEO? It is massive. Previously if a website utilized Flash, a web developer would have to work on adding elements that were indexable and a SEO developer would have to work on various tricks of the trade. Obviously this hindered the development / marketing process and I am sure caused many website owners to limit their use of Flash. Well, not anymore.

According to Google they have been working with Adobe on improving the indexing of all kinds of Flash files - whether snippets like navigation, gadgets or entire websites - by the integration of Adobe’s Flash Player technology. This new Flash indexing algorithm will improve the visibility of Flash content and should have a immediate impact on rankings for Flash heavy websites. Google’s new Flash indexing algorithm will not only be able to index content, but it will also be able to crawl links within the Flash file which will increase content discovery. Basically Google’s goal is to treat a flash file the same way they do a non-Flash website. However, as Google stated this is a work in progress, the new algorithm will not index any other piece of content within the Flash file, that means images and text within the image will not be recognized and indexed.  Also, FLV files will not be indexed. FLV files are videos, like the ones that play on YouTube, and contain no text. Hey, no one said the new algorithm was perfect.

The great thing about this new development is that website owners who use Flash do not have to do a thing. Google will not require any special action to make Flash files indexable, the algorithm will interact with the existing Flash file the same way a user would - by navigating through the file.

There are however three main technical limitations of the Google’s new Flash algorithm (all of which Google and Adobe are working on).

1. Google still does not execute JavaScript so any website that loads a Flash file via JavaScript would have indexing issues.
2. Google will not index external files that are loaded by a Flash file.
3. Google has issues indexing bidirectional languages like Hebrew and Arabic.

So what about the other Search Engines? According to the Adobe Press Release Yahoo is working closely with both Adobe and Google on Flash indexing. However, Yahoo has yet to role out the new technology but should shortly - keep an eye on the Yahoo Webmaster Blog for an announcement. Microsoft is a different story as Adobe has said that the Flash Player technology has not been made available outside of Google and Yahoo. But, Adobe is currently working on making the technology more widely available.  I would be curious to see how Microsoft’s Flash competitor Silverlight fits into this. I am sure Microsoft is working on something because indexing of content could be a product killer for the boys in Redmond.

Flash and SEO, who knew those two words would ever go together. I am sure more details will come out as time goes on but for now I am going to sit back and think of all the great Flash website I can now create.

The social media world has been buzzing the past 24 hours about Digg’s plans for launching their much needed recommendation engine this week. The engine will be launched in limited beta mode and will only be seen (at first) by a limited group of registered Digg users. The videos below explain in great detail the purpose and value of the recommendation engine, however basically Digg is looking to enhance the content discoverability through increasing the relevancy of the “upcoming” stories presented to each user. Digg will be able to do this through user behavior and will always be working to provide the most relevant and timely stories. I am a huge fan of anything that increases relevant content discovery so I applaud Digg’s efforts…and it is about time they did this!

Below are two videos, straight from Digg, explaining their plans and how the recommendation engine will work.

Digg Recommendation Engine from Kevin Rose on Vimeo.

Anton Talks About The Digg Recommendation Engine from Kevin Rose on Vimeo.

As many of you have probably read already, Google has signed a deal with “Family Guy” creator Seth McFarlane to distribute a series of original videos. Starting this September, MacFarlane will launch a new animation project called “Seth MacFarlane’s Cavalcade of Cartoon Comedy” that will be shown exclusively on the Internet. The Google twist is that the new animation series will be syndicated through AdSense, Google’s advertising platform, to targeted websites. To break it down – when visiting your favorite blog or website instead of the standard text or graphic based ads you will see the “Cavalcade” videos. The videos will be 2 minutes long and are described by MacFarlane as “animated versions of the one-frame cartoons you might see in The New Yorker, only edgier.” Each of the 50 episodes MacFarlane will be developing will be different, but according to a NY Times article a typical example will be the 28 second long “Mad Cow Disease” episode.

How does this make money? Advertisements in various forms will be embedded into the video experience - the type of ads displayed can range from pre-roll, ad breaks or ads wrapped around the video - all options are on the table in terms of monetization. MacFarlane will also be involved in creating animated commercials that will run with his content. In return for his efforts MacFarlane will get a percentage of all revenue generated by his episodes.

Now, I do agree that this is a very bold move by both Google and content creators, a move that will be watched closely. The distribution of content, especially when it is professionally produced, is a huge challenge. However, AdSense ads are never put in prime locations - that is reserved for content. AdSense ads, and therefore MacFarlane’s videos will be regulated to the sidebar, bottom of an article or maybe if it lucky embedded into the actual content. On top of that, the whole power of AdSense has been the ability to target ads based on relevancy of the site. You have a blog about gum, you get gum ads. The videos will lose this specific targeting ability and be targeted to a broad demographic (e.g. young men) and not specific to the content.

So what is my problem? As an owner of numerous content websites, including many focused on videos, why would I want another video taking my visitor’s attention away from my content? Yes, I understand I will get paid if someone clicks on the ad but that is not the point. For many websites the main draw is not just to get someone to click on an ad and get a few pennies, the goal of most websites is to get those visitors to engage in the site, not engage in the ad. Also, let’s look at it from the content creators’ side. Online ad space has always been looked at as a “hate it but I can live with it” part of the Internet. You don’t mind the ads because the content is free…is this how you really want your professional videos to be seen?

To me the addition of professional video in ad spots is the same as all of the other types of intrusive ad formats out there. So, again – no thanks Google. I will pass.

Google has posted the audio, decks and Q&A transcript for the Webmaster Live chat that took place last Thursday.  For those that missed it, the live chat basically brought together all of the important people who work at Google to answer any and all search related questions. Even though a great deal of the information presented was very basic, it was still very informative. Below I have pulled out some of the highlights from the live Q&A session that I found to be the most interesting and useful.

Here is the full Google Q&A transcript and the complete Google Webmaster Central blog recap.

Q: I’ve got a question about internationalization: I have a multinational site with country-coded subdirectories and I’ve registered these as such in Webmasters’ tools, will this be exempt from duplicate content rules for a site spanning uk/us/aus ?
A (John Mueller): That’s generally ok. I would still make sure that the pages are obviously well-targeted for those audiences. It wouldn’t make sense to send users from specific areas to one general page. In that case, I would use a single page without geotargeting.

Q: can Google crawl Flash sites/
A (John Mueller): Somewhat — we can extract some information from the Flash files, but it’s generally not the same as with HTML sites/pages.

Q: I’ve got a question about internationalization: I have a multinational site with country-coded subdirectories and I’ve registered these as such in Webmasters’ tools, will this be exempt from duplicate content rules for a site spanning uk/us/aus?
A (Susan Moskwa): Geographic targeting doesn’t affect the fact that we only want to show one version of a piece of content in search results; we will still try to filter out duplicates when we serve search results.

Q: Hi John, I wanted to know more about Google webmaster tools stats.. How can we automate it? Why are there special characters like “[” when we download excel file
A (John Mueller): Hi Ankit, I have a python script on my site at http://johnmu.com/ that will convert those files into more readable ones.

Q: does Google ‘value’ a website incorporating a relevant blog and forum
A (Matt Dougherty): Hi Paul, I would say that an organic blog or forum definitely adds value to your website by creating a community effect.

Q: If a website’s Robots.txt file is goign to a 404 error will it be removed from the index? What if it is missing altogether?
A (Michael Wyszomierski): If there is no robots.txt file Google will assume that there are not any crawling restrictions, as long as there are no other robots directives via meta tags or the x-robots HTTP header directive.

Q: In regards to the Flash files, I believe it is possible to create Flash movies with extra accessible content, correct?
A (evan t): We encourage building Flash sites with html accessibility for googlebot to crawl. For more information check out our blog post on flash: http://googlewebmastercentral.blogspot.com/2007/07/best-uses-of-flash.html

Q: Does Google differentiate between searches in lower case and searches with proper capitalization?
A (John Mueller): We may take this into account if we can recognize that it is relevant to the query.

Q: Our pages are using mod_rewrite to strip “.html”– Will Google think of “process” and “process.html” as separate pages?
A (Susan Moskwa): If both URLs serve content, we will interpret them as two separate URLs. If the one redirects to the other (e.g. with a 301 redirect), this will let us know that one is the preferred/permanent URL.

Q: is an empty robots.txt bad?
A (Reid Yokoyama): Hi ralf - an empty robots.txt by default will allow all Internet spiders to crawl through all the pages on your site. If that is not something you want, then consider modifying your robots.txt file to set permissions.

Q: Does Google take anything from links taged nofollow, for example does it read the anchor text and credit that to the destination?
A (Susan Moskwa): No, it basically drops that link from our link graph (it ignores it).

Q: Is there any limit on the number of redirections 301, a Web site?. In a large site, if you change the URL structure, is the optimum time to do it with 301? or is best done gradually
A (Matt Cutts): There’s no per-page limit on the number of 301s you can do, so you could move 100K pages to 100K new location. However, if we see a really long chain of redirects, eventually we will decide to stop following the chain.

Q: Do 301 redirects send PR to its destination? I have several domains that 301 to 1 domain, and a couple have PR. Will it now send that PR to the 1 domain now that it is 301 redirected? Thank you.
A (Susan Moskwa): 301 redirects are the best way to let us know that you’d like a particular URL to get “credit” for factors from another URL; we’ll pass those signals across a 301 redirect as appropriate.

Q: if the site is designed with css, does the crawler throw out the .css and look only at the HTML?
A (Matt Cutts): Typically we wouldn’t crawl CSS, Kien, but in a few limited circumstances we can (e.g. if we’re checking for hidden text).

Q: Matt, can you comment on the number of links leading to interior content/category pages, that appear on the index of a site - and the impact of having many internal links on the index or not having that..
A (Maile Ohye): Hi Jeff, by index do you mean Sitemap or index.html type page. In general, if it’s index.html (not a Sitemap) then keep is user-friendly and navigatable. We usually say 100 links or fewer. http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer

Q: I’m worried that we’ll miss new visitors because personalized search will drive them to their frequently visited sites instead of those based on organic search relevance. Should I be concerned about this?
A (John Mueller): No :) — we try to show variety in the search results and additionally smaller sites are generally quicker in adopting to new trends, allowing new sites to rank for new terms faster.

Q: Hi Matt, Are there any guidelines available on keyword density we have pages that are about 1 single subject and the keyword density is quite high
A (Matt Cutts): Antony, you may not believe this, but we tend not to think much about KW density here at Google, b/c our algorithms handle it pretty well. My advice is to pull in an innocent/non-search friend and have them read the text. If they raise their eyebrow, …

Q: If I click a PPC listing, will that visit influence organic, personalized search results?
A (John Mueller): I believe this is tracked only if you have the Toolbar, are logged in and have web history enabled.

Q: there is a general view that having a lot of backlinks is a strong influence on PageRank. Does Google have a response to this theory?
A (Matt Cutts): It’s more about the quality of the links than just the raw number of links.

Q: WHAT ARE THE 3 MOST INPORTANT THINGS TO DO TO EARN A GOOD PAGERANK?
A (Mariya Moeva): Content, content and content (:

Yahoo sent a letter to its shareholders explaining its recent decisions, with a focus on why they let the Microsoft deal slip away and the rational behind signing with Google. However, the obvious underlying motive of the letter is to garner support at the upcoming shareholders meeting and keep Carl Icahn and his agenda away.

“The events of recent weeks underscore the fact that your board of directors is far better qualified to represent your interests in the effort to maximize stockholder value than the slate put forward by Carl Icahn.” Sort of reeks of desperation doesn’t it?

The letter does a good job at explaining their rational behind the Google deal, however I was hoping they would have elaborated on a couple points. For example,  I would have loved to hear more about their “key strategic objectives”. What exactly is Jerry Yang’s vision for the future of Yahoo? What direction are they going in? How are they going to capture more search market share? What are they doing about the serious brain-drain going on? Yahoo will have to address these questions before the shareholder vote in order to build any sort of investor confidence….however, based on Jerry’s actions recently I wouldn’t be so sure.

Read the letter and make your own conclusions…

———————————————————-

Dear Fellow Stockholders:

We are writing to update you on the latest developments here at Yahoo!, including our recently announced commercial agreement with Google and the outcome of our discussions with Microsoft regarding a potential transaction.

On June 12, we announced a non-exclusive agreement with Google that we expect will generate approximately $250 to $450 million in incremental operating cash flow for Yahoo! in the first twelve months following implementation. This cash flow will enhance our profitability as well as help support achievement of our key strategic objectives. Combined with continuing advances in our own search capability, the agreement is an important step in our efforts to capitalize on the high-growth online advertising opportunities where we are best positioned to compete successfully and create more value.

Let us explain why we find this new agreement so exciting.

The Yahoo!-Google Agreement is Financially Attractive and Strikes the Right Strategic Balance.

Under the agreement with Google, Yahoo! will continue to provide algorithmic and sponsored search results, but now will also have the ability to run sponsored search ads supplied by Google alongside Yahoo!’s search results. Advertisers will pay Google directly for each click on Google paid search results appearing on Yahoo!. Google will then pay us a fee (in industry jargon, traffic acquisition cost) based on revenue realized from click-throughs on ads supplied to Yahoo! by Google.

This carefully structured agreement strikes the right strategic balance, enhancing our financial results while advancing our strategic objectives of being the “starting point” for the most users on the Internet and offering such compelling value that advertisers will see us as the “must buy” in online advertising.

One of our key strategies for achieving these objectives is to capitalize on the increasing convergence of search and display advertising, where we are especially well positioned to compete and succeed. We have already accelerated our efforts to strengthen our presence in display through a variety of initiatives and acquisitions in recent months. Our new commercial agreement with Google enhances our ability to pursue this strategy.

Another key strategy is to open our platform to other developers to optimize monetization for our advertisers and publishers and provide the best experience for our users. We see this agreement as a natural extension of the efforts we have already made toward an open marketplace.

The Google agreement is non-exclusive and provides strategic and operational flexibility for Yahoo!. It allows Yahoo! to use Google’s services in those areas where Google monetizes our inventory more effectively but also permits us to continue to use our own search technology in areas where we believe we are most competitive. The net result is that the agreement helps us accelerate one of our strategic aims–closing the monetization gap. At the same time, it allows Yahoo! to continue to compete aggressively in search and display advertising.

Importantly, the agreement does not prevent Yahoo! from pursuing other alternatives that could increase stockholder value. Because the agreement can be terminated by either party upon a change in control, it would not preclude a transaction with Microsoft or any other potential acquiror in the future.

The Yahoo!-Google Agreement Does More for Stockholder Value than Microsoft’s Search-Only Hybrid Proposal.

We also want to update you on the conclusion to our discussions with Microsoft regarding a potential transaction. As we explained in our last letter, our board and management held numerous meetings and conversations with Microsoft about its proposal to acquire Yahoo!, both before and after Microsoft withdrew that proposal on May 3. On June 8, our Chairman, Roy Bostock, other independent board members, and members of Yahoo!’s management team again met in person with Microsoft representatives. At that meeting, Microsoft stated unequivocally that it has no interest in acquiring all of Yahoo!, even at the price range Microsoft had previously suggested.

Microsoft did propose an alternative transaction. Rather than acquire our whole company as it had been proposing for months, Microsoft now proposed to acquire only our search business for $1 billion and a share of future search advertising revenue. This proposal also included an $8 billion investment in Yahoo! but required Yahoo! to commit to a 10-year exclusive arrangement that would have made us dependent on Microsoft for all of our search business. It would also have given Microsoft veto rights on certain future Yahoo! actions, including a sale of Yahoo!. Our board of directors and management made a great effort–and conducted in depth negotiations–to elicit a feasible proposal from Microsoft that made strategic and financial sense for Yahoo!, but without success.

While Microsoft’s search-only hybrid proposal may have been helpful to Microsoft, our board and management concluded it would have had a significant adverse impact on Yahoo! strategically, leaving the Company without the operational control of search assets and technology we view as critical to our objective of becoming a leader in the converging search and display advertising business. The board and its advisers also carefully studied the financial impact of Microsoft’s proposal and concluded that it would have provided no meaningful improvement to our operating cash flow. In short, this proposal would have generated substantially less value for Yahoo! stockholders than Microsoft has suggested.

Based on all the key factors–strengthening our competitiveness, protecting our strategic position, generating attractive financial returns–the Google agreement is far better than Microsoft’s search-only hybrid proposal. That’s why we moved forward with it.

Your Current Board of Directors Has the Knowledge, Experience and Commitment to Best Represent Your Interests and Maximize Stockholder Value.

The events of recent weeks underscore the fact that your board of directors is far better qualified to represent your interests in the effort to maximize stockholder value than the slate put forward by Carl Icahn.

Based on Mr. Icahn’s narrow agenda, it seems highly unlikely that either he or his slate would bring added value to Yahoo!. Consider the following:

– Mr. Icahn put forward his slate so as to sell Yahoo! to Microsoft, even though he had no knowledge of the sustained efforts made by your current board and management to determine whether Microsoft was willing to engage in a transaction that would provide appropriate value and certainty of achieving that value. On June 8, Microsoft once again made it perfectly clear that it is not currently interested in acquiring Yahoo!.
— Mr. Icahn publicly opposed any alternative form of transaction with Microsoft. Your board and management, after thorough and deliberate negotiations and evaluation, separately concluded on its own that the alternative hybrid deal proposed by Microsoft was, indeed, not in the best interests of the Company or its stockholders.
— Mr. Icahn urged, as an alternative to a Microsoft transaction, that Yahoo! find a way to partner with Google that would not preclude a transaction with Microsoft in the future. We have done exactly that through the commercial agreement with Google we announced on June 12.

Simply put, you can choose to vote for a slate of nominees with no articulated plan for the future of Yahoo!–and who now have essentially no alternative agenda to offer you–or you can choose to vote for your existing board of directors which has the independence, experience, knowledge and commitment to navigate the Company through the rapidly-changing Internet environment, execute on our strategic objectives and deliver value for Yahoo! and its stockholders.

It is time for Yahoo! to turn its undivided attention to implementing its key strategies, and we therefore urge you to reject Mr. Icahn’s slate and his ill-defined agenda.

We strongly urge you to vote your WHITE Proxy Card today for your current board of directors.

We look forward to sharing our progress with you as we move forward and we thank you for your support.

Sincerely,

Roy Bostock                     Jerry Yang
Chairman of the Board      Chief Executive Officer