A lot of ink has been spilt on the many mistakes made by Yahoo. How the company refused to buy Google or Facebook when the opportunity existed. Yahoo might in fact be a story of many missed opportunities. But those misses did not really define the failure. Yahoo failed because of a series of poor decisions and a company culture that did not permit it to move forward. The implicit assumption in all of the criticism is that Google would have certainly gone on to become the company that we know today. Yes, perhaps there would have been one less competitor to deal with. Those of us who adopted and started using Google did so because its simplicity and precision. Do you really imagine that Yahoo! which was always a portal, would have purchased Google and retained a blank white page with a box?
Cultural DeceitYahoo failed because of the things that made it successful to begin with. It was launched as a directory service and then went on to adopt the portal model. For whatever it is worth, it worked very well for them in the late 90's. The linked post on stratechery which talks about the development of culture.
Culture does not beget success but it is the product of itWhen a company does something and it works out for the company, it becomes a formula. The people who join the company hear the same stories and do the same things. An employee who joins Marriott hears stories of awesome customer service which helped them retain customers, got someone promoted. The formula to get ahead becomes, providing awesome customer service. Yahoo was a portal and wanted to continue to survive in that paradigm. It was just much easier to sell the idea to advertisers and generate revenues through multiple channels. Google went with income from 'Search' only. Honestly, the good boys at Google did not want to do even that! Eric Schmidt had to wrestled them into advertising. Yahoo's culture did not allow them to adjust to the changing nature of the web. Much like Google finds it hard to adjust 'search' to the demands of smartphones. Facebook by comparison found it extremely comfortable adapting to mobile.