The Risky Yahoo! Inc. Strategy That Steals From Facebook and Google

A plan to require users to have distinct Yahoo! accounts for logging into services risks angering users while offering hope of better data for advertising.

Mar 10, 2014 at 12:00PM

CEO Marissa Mayer hasn't been shy about shifting Yahoo!'s (NASDAQ:YHOO) strategy. First, she cut back on work-at-home options. Then, she shifted focus from display ads to contextual ads and original content. Now, she wants to restrict access to popular services such as Fantasy Sports and Flickr to only those users who've registered with Yahoo! directly. Fool contributor Tim Beyers explains the implications in the following video.

Specifically, Yahoo! will require those who had been logging in via either Facebook (NASDAQ:FB) or Google (NASDAQ:GOOGL) accounts to have their own Yahoo! profile. The hope? Gain a better understanding of users' habits in context.

It's a big and potentially lucrative move. Under the old system, Yahoo! wouldn't know much beyond a username about a customer arriving from a Google account. Requiring these same users to register with Yahoo! should allow the company to better pair demographic and usage data for smarter contextual advertising.

The risk is in angering users who like the old system, a problem we've seen Yahoo! face before with changes to Mail. A recent breach of its new email system won't help matters, nor will it make it easier to convince users to trust Yahoo! with more of their data. Nevertheless, Tim says the potential upside via smarter advertising is worth the effort.

Now it's your turn to weigh in. What do you think of Yahoo!'s strategy? Will you be getting a distinct profile or do you have one already? Please watch the video to get Tim's full take and then leave a comment to let us know where you stand and whether you would buy, sell, or short Yahoo! stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Google at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Yahoo! It recommends and owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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